Prepared by:
Dr. Alias bin Rameli
Research and Development DivisionFEDERAL DEPARTMENT OF TOWN AND COUNTRY PLANNING
PENINSULAR MALAYSIA
1 December 2011
OCCASIONAL PAPER SERIES
LAND USE PLANNING SYSTEM Its Role In Housing Development Process
FDTCP 01/2011
OCCASIONAL PAPER SERIES – FDTCP 01/2011
Land Use Planning System : Its Role in Housing Development Process
Federal Department of Town and Country Planning, Peninsular Malaysia
TABLE OF CONTENTS Page
1.0 INTRODUCTION 1
2.0 LAND USE PLANNING SYSTEM AND DEVELOPMENT PROCESS 3
2.1 Background of the Land Use Planning System 4
2.1.1 The Land Use Planning System Framework 4
2.1.2 The Approach of Land Use Planning 6
2.2 Legislation and Mechanism of Land Use Planning 8
2.2.1 United Kingdom 8
2.2.2 The United States 10
2.2.3 Malaysia 11
2.4 The Implementation of Land Use Planning System in Malaysia 13
2.4.1 Preparation of Development Plans 13
2.4.2 Process and Procedures of Planning Control 17
2.5 Rationale for Land Use Planning to Intervene in the Development Process 19
3.0 LAND USE PLANNING SYSTEM AND HOUSING SUPPLY PROCESS 21
3.1 Relationship Between the Operations of Land Use Planning and Market System in Housing Supply Process 21
3.2 The Role of the Land Use Planning System in Housing Supply Process 24
3.3 Requirement to Fulfil Housing ‘Needs’ and ‘Demand’ in the Planning of Housing Supply 26
3.4 The Importance of Market Demand in the Planning of Housing Supply 28
4.0 HOUSING DEVELOPMENT PROCESS IN MALAYSIA 29
5.0 HOUSING PLANNING PROCESS IN MALAYSIA 32
5.1 The Planning of Housing Supply 32
5.1.1 The National Physical Plan: Outcomes, Strategy and Policies on Housing Supply 33
5.1.2 Structure Plan: The Activities and Aspects Related to the Planning of Housing Supply 37
5.1.3 Local Plan: The Activities and Aspects Related to the Planning of Housing Supply 41
5.2 The Controlling of Housing Supply 46
5.2.1 The Process and Procedure of Controlling Housing Supply 46
5.2.2 Factors to be Considered in Controlling Housing Supply 47
6.0 THE OBJECTIVES OF PLANNING AND CONTROLLING OF HOUSING SUPPLY 48
7.0 THE FRAMEWORK OF THE PLANNING AND CONTROLLING OF HOUSING SUPPLY 49
8.0 CONCLUSION 53
LIST OF TABLES
Table 1 Comparison between the total housing supply and the total housing need in Peninsular Malaysia, 2000 – 2005 34
Table 2: The aspects of existing housing conditions that need to be surveyed during the preparation of a local plan 43
LIST OF FIGURES
Figure 1 Land development systems 4
Figure 2 Framework of land use planning system 5
Figure 3 Hierarchy and function of development plans in Malaysia 14
Figure 4 Conceptual model of the political economy of housing development 23
Figure 5 The role of the planning system in housing supply process 25
Figure 6 Housing Development Process in Malaysia 31
Figure 7 The framework of the process of planning and controlling of housing supply 50
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Land Use Planning System : Its Role in Housing Development Process
LAND USE PLANNING SYSTEM :
ITS ROLE IN HOUSING DEVELOPMENT PROCESS
ABSTRACT
The role of land use planning system in housing development is not only limited to
meeting of housing needs, but also encourages and ensures the efficiency of the
housing market system. Even in the failure of the housing market, planning system
is seen able to rectify the failure by properly governing the activities of housing
approval. The land use planning mechanism particularly through development plans
and development control are recognised as a tool in determining the current and
future housing needs, formulation of the housing policies, allocation the amount of
land and identification of suitable locations for housing development. The planning
mechanisms also play important roles to facilitate and control the housing production
process. Against this background, this paper will highlight the debates about the
capability and the way of land use planning operations in housing development;
discuss generally the background, legislation, mechanisms and the implementation
of land use planning system; and clarify the rationales of land use planning to
intervene in the development process. Special focus will be given to the points
related to the relationship between land use planning system and housing supply
process by underlining the requirement and the importance to fulfill housing need,
housing demand and market demands in the planning of housing supply. This paper
ends with the explanation about the housing planning and development processes in
Malaysia and developing the framework of the planning and controlling of housing
supply.
Keywords: Land Use Planning, Housing Development, Housing Planning
1.0 INTRODUCTION
Recognising housing as an important economic sector has not only raised a debate
about the extent of housing investment benefits to the economic development, but
also led to the discussion of how efficient and effective its delivery system operates
(von Einsiedel, 1997). There are numerous factors, such as economic performance,
fiscal policy, government intervention and policies and market system that arguably
influenced the efficiency of the process of housing development (Monk et al., 1996;
Hull, 1997; Chan, 1997b; Bramley, 2003; Ratcliffe et al., 2004). It is also equally
important to relate it with the operation of the land use planning system.
Previous studies, for example by Pearce (1992), Hull (1997), Asiah (1999), Adams
and Watkins (2002) and Carmona et al. (2003), had discussed extensively the role
and importance of land use planning activities in housing development. The
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Federal Department of Town and Country Planning, Peninsular Malaysia
significance of the system in housing development was also translated in the form of
relationship between planning process and development process. This can be seen
in various models of development process, such as the development-pipeline model
(Barrett et al., 1978), linear model of the land development process (Ratcliffe, 1978)
and model of development and the planning process (Bramley et al., 1995). In
relation to this, although it is generally accepted that the land use planning system
plays a pivotal role in achieving sustainability, efficiency and effectiveness of housing
development (Golland and Gillen, 2004; von Einsiedel, 1997; Chan, 1997), the
capability and the way it is operated still generate various debates.
The first debate is about the ability of the system to intervene and influence the
process of housing market. Von Einsiedel (1997) stresses that although most of the
housing activities are shaped by market forces, the planning system also has its own
role especially in governing its production process. According to Short et al. (1986),
the planning system can limit the powers of housing market because the housing
development process is bound by rules and policies set by the system. In another
perspective, Rydin (1993) clarifies that the planning system not only operates to
encourage the efficiency of housing market, but also plays a role to rectify failures of
the housing market. Bramley et al. (1995), on the other hand, observes that some of
the problems and failures in housing market were affected and exacerbated by the
unresponsiveness of activities in the planning system.
The second debate is about the nature of housing planning which focuses on
meeting housing needs. Nicol (2002) argues that meeting housing needs alone is
insufficient to achieve a more integrated and effective housing development. This
argument was supported by Golland and Gillen (2004), stressing that the housing
requirements are not only driven by population trend but also influenced by
affordability and effective demand of household. In order to ensure the local housing
requirement is adequately and successfully met, Nicol (2002) suggests the operation
of planning system should fulfil both objectives of meeting housing needs and
housing demand.
The third is on the extent to which the planning system considers the criteria of
market demand. Hull (1997) stresses that apart from playing a role in meeting
housing needs and household effective demand, the planning system should also
look at the importance of the market demand criteria. The significance of market
demand was also addressed by Bramley et al. (1995) by proposing the planning
process to formulate policies and procedures which are sensitive to the needs of the
market demand. In similar tone, Golland and Gillen (2004) emphasise the necessity
for the planning process to understand the consumer‟s `taste‟ in the housing market.
Stressing on the above arguments, Healey (1992) proposes three approaches in
achieving the housing planning goals by the planning system consisting of following
the market, managing the market and creating the market.
The subsequent argument is that the planning system constrained the efficiency of
housing development. According to Monk et al. (1996) and Asiah (1999), planning
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Federal Department of Town and Country Planning, Peninsular Malaysia
controls have often been considered as a constraint since they restrict the supply of
housing land, the location of housing development, the type and density of the
development as well as the timing the development could take place. Grigson (1986),
however, views that the planning system does not restrict the development of
housing. According to Grigson, the planning system operates orderly by allocating
sufficient land for future housing and ensuring it is calculated on the basis of actual
need, worked out in the light of demographic projections and household formation
statistics.
Next, is the extent to which the planning system plays its role in allocating the
quantity and locations of housing and controlling the production of new housings.
Rydin (1993) stresses that the planning system should operate to allocate sufficient
land for housing and response efficiently to the planning applications for such
development. According to Pearce (1992), the housing planning goals are
considered achieved if the planning decisions may assure an adequate and
continuous supply of land for housing and provide acceptable choices at the
available and preferable locations. The extent of its effectiveness, however, is
queried by Hull (1997). Hull perceives the process of forward planning and
regulations for housing planning still suffers from lack of reliable information on
market indicators and current flow between the housing markets and the levels of
production of housing stock. Hull (1997) thus propose that the process of forward
planning and planning control should seriously consider the importance of market
mechanisms in planning and making decisions for housing development.
The above debates, although try to argue the role and capability of planning system
in housing development in various perspectives, but if read between the lines, is
actually centred at the problems of managing housing supply. In this respect, the
operation of planning system is seen to have concentrated only on meeting the broad
housing needs by neglecting the aspects of household effective demand and market
demand in planning housing supply. Since there are a lot of arguments about the
capability of the planning system in managing housing supply, it is thus necessary to
explore this profoundly, particularly in the context of the Malaysian planning system.
2.0 LAND USE PLANNING SYSTEM AND DEVELOPMENT PROCESS
The land use planning system, through the mechanisms of development plan and
planning control, and the housing market system are among the systems that exist
and influence the efficiency and effectiveness of the process of housing development
(Bramley et al., 1995; Golland, 1998). Previous literatures had proven that there are
a close interaction between the activities of land use planning with the activities of
housing market, particularly with regard to the structure, operation and outcomes of
housing supply. Even in the situation of imperfection and housing market failure, it
becomes a function of the land use planning to rectify the failure by properly
governing the process of planning and controlling of housing development.
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2.1 Background of the Land Use Planning System
2.1.1 The Land Use Planning System Framework
Land use planning deals with several systems that influence the physical structure of
the city (Ibrahim, 1998; Foziah, 2002). According to Chapin and Kaiser (1979), urban
land use planning is influenced by three key systems, namely activity systems, land
development systems and environmental systems. Activity systems are concerned
with how man, through his institutions such as households, firms and governments,
organizes his affairs in the pursuit of human needs and how these institutions interact
with one another in time and space. Activity systems determine demands for various
urban spaces such as housing, recreation, commercial and infrastructure.
The land development systems focus on processes that convert space and adapt
them for use of the activity systems. The principal agents in the development
systems include pre-development landowners, developers, consumers, financial
intermediaries and public agencies. They relate to the supply side of the urban
development process (Figure 1).
The third system that influences the urban land use development is the
environmental systems. These environmental systems provide the niche for human
existence and the habitat and resources to sustain man. These include plants, animal
life system and the fundamental processes relating to water, air and matter.
Environmental systems function both to constrain and to enhance the functioning of
the other two systems.
Figure 1: Land development systems
Source: Chapin and Kaiser (1979:30)
Development Agents
Predevelopment landowners
Development Systems
Land marketing (assessment of utility of continuing land in present state vs. return from selling or leasing it)
LAND DEVELOPMENT SYSTEMS
Developers
Land conversion or re-conversion
Consumers
Purchasing or leasing locations and facilities
Financial intermediaries
Acquisition and development – financing transactions
Public agencies
Review and approval of land use and development
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GOALS OF LAND USE PLANNING
(Sustainability, Health and Safety, Convenience, Efficiency and Energy Conservation, Environmental Quality, Social Equity
and Amenity
Activity
Systems
KEY URBAN LAND USE SYSTEMS
Spatial
Environmental
Systems
Development
Systems
Economic and Population
Growth
Land Use Pattern
Aspatial
URBAN PLANNING AND GUIDANCE SYSTEM
(decision guides and action instruments)
Political
Activities
Planning
Activities
These key systems play an important role in the establishment of the land use
planning framework. According to Chapin and Kaiser (1979), the goals of urban
development that relate to public interest such as sustainability, health safety,
convenience, efficiency, energy conservation, environmental quality, social equity
and amenity are very much influenced by the interplay of the systems together with
economic and population growth and urban planning and guidance system (Figure
2).
Figure 2: Framework of land use planning system
Source: Adapted from Chapin and Kaiser (1979:65)
The urban planning and guidance system through planning activities and political
activities acted as decision guides and action instruments in the land use planning
system. According to Ibrahim (1998), planning activities refer to the preparation of
development plans and planning studies that are used as guides for the purpose of
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Federal Department of Town and Country Planning, Peninsular Malaysia
planning decisions. The decision to adopt a particular plan and approval of
development proposal is made by the state or local authority concerned. In ensuring
the proposed land use development complies with the planning guides, a proper
exercise of development control by planning authorities is required. This shows
planning activities as one of the components in the urban planning and guidance
system play a pivotal role to complement the land use planning system.
2.1.2 The Approach of Land Use Planning
The adoption of land use planning approach varies depending on the context,
experience and practice of the urban development process, in particular places and
time (Ibrahim, 1998). It began with the model of „blue print‟ physical planning or
master planning approach before shifted to the procedural planning approach. The
model of „blue print‟ planning is one of the earlier approaches which tries to solve the
urban problems through the medium of the plan or blue print. It was widely applied
before 1960s based on the public agreement on the value and policy direction in
managing the urban environment changes (Ibrahim, 1998; Foziah, 2002).
„Blue print‟ planning could be regarded as an exercise in physical, influenced by the
urban design tradition of planning (Taylor, 1998; 1999). It incorporates the elements
of urban design, architecture, engineering and consideration to the management of
public area (Healey, 1982; Foziah, 2002). The approach incorporates the principles
of urban management into the physical planning programs and attempts to influence
or direct all activities related to the physical environment for the benefit of public. It
employs land use map and zoning, density control, building control and planning
standards to regulate urban development process (Ibrahim, 1998).
The approach can be traced in urban development process in Britain until the 1960s
through the activities of producing comprehensive master plans, neighbourhood
design, garden cities and utopian ideals for cities (Healey, 1982; Goh, 1991, Hobbs,
1996). Similar approach was adopted in the Malaysian context through preparation of
general town plan as enacted in the Town Board Enactment (Cap 137) and previous
planning enactments (Goh, 1991). Due to its physical nature and rigidity, the „blue
print‟ planning was regarded as a failure as it is unable to deal with various social
issues such as urban poverty, unemployment and urban inequalities (Ibrahim, 1998).
The approach of land use planning was gradually substituted by procedural planning
in line with the development of urban planning profession and the influence of social
scientific methodology (Ibrahim, 1998) as well as due to increasing of awareness of
interrelationship between the factors of physical, social, economy and environment in
urban development (Foziah, 2002). Through the procedural planning approach, the
focus of land use planning was shifted from a prominently physical design exercise to
the rational procedure of producing plans and control over the development of urban
area (Ibrahim, 1998).
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The approach of procedural planning was conceived to become a fundamental
paradigm of planning (Healey et al., 1982). According to Ibrahim (1998), procedural
planning emphasises on solving urban problems based on rational procedures and
methods for decision making. The procedures and methods applied have led the
planning process to form the goal and objectives to be achieved, analyse urban
problems and conditions systematically, formulate and evaluate various policies and
proposals, monitor performance and achievement of urban development process
constantly and make an adjustment whenever necessary to the existing policies and
proposals (Chapin and Kaiser, 1979). This approach makes land use planning a
continuous process of managing urban change.
The approach was translated in the preparation of urban development plans. In the
UK, it was adopted in early 1970s through preparation of SP and LP, as legislated by
the 1968 Town and Country Planning Act (TCPA) (Healey, 1983). It was also
incorporated and institutionalized in the Malaysian land use planning system
immediately after the formulation of Act of 172 in 1976 (Goh, 1991). The Act requires
the preparation of SP and LP to follow the rationale procedures and methods through
systematic analysis of strategic sectors, identification of problems and issues and
derivation of proposals on the basis of the findings. The approach also provides an
opportunity to the public to comment on the findings and make suggestions to
streamline the proposals in development plans (Foziah, 2002).
The effectiveness of the procedural planning, particularly in Malaysian context,
however was argued from various angles. Ibrahim (1998) argues that although the
approach is ideal in fulfilling the requirement of rational model, effective application of
the approach is inhibited due to limited information available and political
circumstances. The preparation of development plans according to the approach
was also time consuming because of the numerous procedures that need to be
followed before the plan could be gazetted (Abdul Munit, 1996). The procedures not
only limit development plans to cope with the changes and growth of the economy
and urban development rate but also led the plans to focus on the process of
preparation, with less thought given to develop the proposals (Goh, 1991; Ibrahim,
1998). Consequently, poor quality plan have in some cases been produced which
eventually curbed the effective implementation of many policies and proposals in the
plans (Abdul Munit, 1996).
The procedural planning approach remains in the system of land use planning until
today. Nevertheless, it changes from time to time in terms of scope and practice. A
growing awareness on sustainability at the end of 1980s and early 1990s has
expanded the scope and practice of land use planning (Ratcliffe et al., 2004). The
introduction of sustainable development concept in 1987 by the World Commission
on Environment and Development (The Brundtland Commission) and the declaration
of the United Nation‟s Conference on Environment and Development (The Rio
Declaration) at Rio de Janeiro in 1992 which issued an Agenda 21 led land use
planning to accommodate a more environmentally aware agenda (Ibrahim, 1998;
Foziah, 2002; Ratcliffe et al., 2004).
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Certain principles from the Rio Declaration and Agenda 21 were incorporated in the
land use planning process. In Britain, the 1990 Town and Country Planning Act and
the 1991 Planning and Compensation Act provide a framework for plan-led
environmental planning. Through the acts and several planning policy guidance, a
greater emphasis was given to physical and environmental issues and sustainable
development aspects (Greed, 1996c).
An effort to incorporate the concept of sustainable development into the land use
planning practice was also done in Malaysia. The amendment to the Act of 172 in
1995 had stressed the need for better environmental protection through new
provisions on preservation of the natural topography, protection of trees,
conservation and rehabilitation of buildings of historical significance and architecture
merit and cultural heritage (Zainuddin, 1995). The amendment requires the
preparation of LP to provide measures for the preservation and enhancement of
natural features in the planned areas (Foziah, 2004). The amendment had also led
developers to prepare and submit development proposal report (DPR) when
submitting an application for planning approval. The report needs to underline
measures to preserve natural features and indicate the impact of the proposed
development on the surrounding areas (Zainuddin, 1996; Ibrahim, 1998).
The application of procedural planning approach has continually changed to suit the
new methods and thoughts in urban development. The technique of sequential
approach as has been in practice in the UK (Zainul, 2005; Khairiah, 2006; 2008), the
concepts of smart growth and new urbanism as adopted in the USA (Emily, 2005;
Berke et al., 2006), the idea of compact city (Ho, 2007) and the key principles of new
urban planning as declared in the Vancouver‟s World Planners Congress in 2006
(Vancouver Declaration) (Hague et al., 2006) are among the ingredients which shift
the scope and practice of urban land use planning throughout the world, including
Malaysia.
2.2 Legislation and Mechanism of Land Use Planning
Bramley (2003) describes land use planning as an administrative system which is
governed by a set of regulations and mechanisms. For comparison, this section
explores the legislations and mechanisms related to land use planning as formulated
and adopted in three different countries, namely United Kingdom (UK), United States
(US) and Malaysia.
2.2.1 United Kingdom
In the UK, the 1947 TCPA was considered as a revolutionary legislation that provides
a legal tool for the practice of land use planning and development control (Healey,
1983). This legislation introduces a comprehensive planning controls and required
local authorities to prepare land use plans (Prior, 2000; Hobbs, 1996). Land use
plans prepared under the 1947 Act indicate the broad patterns of land use for the
planned areas (Lambert, 1996; Hague, 2000).
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After 1947, the UK planning legislation went through several amendments to cope
with the new town planning practice and institutional arrangements (Hobbs, 1996).
Nevertheless, the formulation of the 1968 TCPA was seen as a landmark to the
evolution of UK‟s planning legislation. The 1968 Act introduces a significant reform
to the system of plan preparation by introducing the mechanisms of SP and LP
(Healey, 1983). The 1968 Act requires the county council or the Greater London
Council to prepare SP which among others need to outline the statement of strategic
and long-term planning objectives and policies covering various land use sectors.
The LP needs to be prepared by a city, district or borough councils, providing a more
detailed and short-term list of policies to be applied specifically to individual sites
(Jones and Watkins, 1999; O‟Sullivan, 2003). The 1968 Act also provides that the LP
policies and proposals need to be in conformity with the SP and central government
advices (Ratcliffe et al., 2004).
The 1968 Act has led the implementation of land use planning to be exercised under
two distinct but interconnected subject areas, dealing first with the production of
planning policies and then how those policies feed into the development control
system, whereby decisions are made on individual planning applications (Ratcliffe et
al., 2004). The reforms of 1968 Act are subsequently consolidated into the TCPA,
1971 which basically remained the principal of planning legislation provided by the
1968 Act (Ratcliffe et al., 2004; Hobbs, 1996).
The introduction of the new TCPA in 1990 (1990 Act) and the Planning and
Compensation Act in 1991 had changed the scope and practice of the UK‟s land use
planning. These Acts, as mentioned above, provided a framework which heralded a
return to plan-based planning, with greater emphasis on environmental issues.
According to Hobbs (1996), despite the return to plan-led planning, central
government still sought to restrict the form and content of statutory plans to land use
and development matters.
Significant changes involving the planning legislation and mechanism have also
existed in 1986 and 1995. In 1986, the unitary development plan was introduced in
line with the abolishment of Greater London Council and six metropolitan counties,
where their powers were passed on to the London boroughs and the metropolitan
district councils (Greed, 1996b; 1996d). The requirement and principles for preparing
the plan was legislated in the 1990 TCPA (Mohd. Anuar, 1991; Greed, 1996d). The
plan was subsequently produced by other district councils in England, Scotland and
Wales in 1995 and later years following the abolishment of some county and regional
councils (Ratcliffe et al., 2004).
The latest reform to the UK‟s planning legislation was made in 2004 through the
formulation of the Planning and Compulsory Act. The 2004 Act introduces the local
development framework (LDR) to replace the previous system of county level SPs
and district level LPs, and unitary development plans for Unitary authorities. The LDR
system is intended to suit the different needs of a particular area and can be easily
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updated, replacing previous development plan system which was perceived too
inflexible and difficult to change in a timely manner (Ratcliffe et al., 2004).
Besides development plans, the UK planning legislations, since 1947 TCPA, also
give an emphasis to the provisions related to development control activity. The gist of
the legislation with regard to the activity is that planning permission is required for
carrying out „development‟ (Ball, 1983; Mohd. Anuar, 1991; Ratcliffe, et al., 2004).
The definition of development under the legislations is “the carrying out of building,
engineering, mining or other operations in, on, over or under land, or the making of
any material change of use of any buildings or other land”. This definition remained
unchanged since 1947 (Mohd Anuar, 1991).
The broad definition, however, has been refined in the 1971 TCPA and later in the
1990 TCPA by bringing in certain types of activity within the definition (S. 55(3)) and
excluding from control other defined activities (S. 55(2)). In addition, the subordinate
legislations, i.e. General Development Order 1988 (GDO), Use Classes Order 1987
(UCO) and Special Development Orders (SDO) and the Secretary of State for the
Environment decisions through various administrative devices further strengthened
the process of development control in the UK (Mohd Anuar, 1991; Ratcliffe, et al.,
2004).
Another important aspect contained in the UK development control system is
regarding the method of decision making for new planning applications. In the UK,
plans (development plans) have always been advisory only and act as one of the
considerations taken into account in making development decisions (Bramley et al.,
1995; Lambert, 1996). It means that in making decisions on development planning,
authorities are also required to take account of „other material considerations‟. This
aspect has existed since the 1947 Act and incorporated in the 1971 Act (S. 29) and
1990 Act (S. 70(2)). The 1947, 1971 and 1990 Acts provided that, the decision
maker, in this context refers to LPA, “shall have regard to the provisions of the
development plan so far as material to the application and to any other material
consideration” (Foziah, 2002; Ratcliffe et al., 2004).
The provision of the aspect was slightly changed by the introduction of the Planning
and Compensation Act, 1991. This Act under Section 26, which was later carried
over into the Planning and Compulsory Act, 2004 provides that “where in making any
determination under the Planning Acts regard is to be had to the development plan,
the determination shall be in accordance with the plan unless material consideration
indicate otherwise” (Ratcliffe et al., 2004:44). Although the 1991 Act gives legislative
force to follow development plans, principally the discretionary system in approving
the applications for development still exist (Bramley et al. 1995).
2.2.2 The United States
The US land use planning system is quite different from what has been practised in
the UK (Asiah, 1999). In fact, its land use planning mechanism and legislation vary
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from one state to another (Ho, 2003). In general, its land use planning mechanism
consists of the General Plan and Area Plan. The General Plan is a comprehensive
long-term physical plan that details the planning and controlling of subdivision and
zoning for the local government areas. This plan contains planning elements, such as
land use zoning, traffic circulation, public facility and open space. The Area Plan is
prepared for specific areas within the General Plan. This plan is basically similar to
the mechanism of the British LP (Ho, 2003). Through the plans, suitable land use
zoning and conditions for the planned areas will be determined (Monk et al., 1991;
Foziah, 2002).
Both plans are prepared according to several regulations such as zoning ordinance,
subdivision ordinance, official maps and Building Code. The zoning ordinance
defines the specific zoning and regulates the height, setbacks, floor area ratio,
minimum lot size and density. The subdivision ordinance will set the subdivision
controls and standards for infrastructure development comprises of road alignment,
water supply, sewerage system and other development control parameters. The
official maps will control and restrict the property development in areas planned for
public facilities. For the Building Code, it contains standards on building to regulate
improvement of buildings in urban property developments (Ho, 2003).
In relation to development control, the US basically practises regulated planning
system (Foziah, 2002). The system will bind decision makers to follow land use
zones, conditions and other requirements stipulated in the general and area plans
when making consideration on each development proposal. According to Faludi
(1987), the system has an advantage because it gives certainty to land owner and
developer as well as to decision makers. In addition, the system also provides a right
to the third party to object to the planning decisions if any development approval
contradicts with the approved plans (Foziah, 2002).
2.2.3 Malaysia
Land use planning activities in Malaysia are governed by several planning
legislations. As a British colony, its legislations have tended to use British planning
legislations (Foziah, 1986). Its transition can be traced from the pre-British colonial,
during the British colonial and post-independence period until the formulation of Act
of 172 in 1976. The first piece of planning legislation in Malaysia can be traced back
to 1881 involving an environmental control and fire preventive measures. It was
introduced by the British‟s States Council after a large part of Kuala Lumpur was
destroyed by a fire (Quazi, 1986; JPBD Semenanjung Malaysia, 2002).
Later, in 1890, a Sanitary Board was set up to improve municipal and health
services. Through this Board, several by-laws related to planning activities such as
submission of plan for new building and amendment plan for old building were
introduced. These governmental steps can be viewed as the forerunners of planning
legislation in Malaysia. In fact, these were the only rules and regulations which were
available for the first time to control town environment.
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In 1917, Town Improvement Enactment was endorsed which gave a power to the
Sanitary Board to implement town development and redevelopment. The Enactment
was subsequently replaced by Town Planning Enactment 1923 and Town Planning
Enactment 1927. In 1929, the 1927 Town Planning Enactment has been abolished
and most parts of the enactment were incorporated in the Part IX of the Sanitary
Boards Enactment 1929 (JPBD Semenanjung Malaysia, 2002).
In 1935, Sanitary Boards Enactment 1929 was reviewed and combined with the
„Sanitary Boards Enactment, Cap 137‟ of the Laws of Federated Malay States, 1935
(F.M.S Cap 137) (JPBD Semenanjung Malaysia, 2002). This enactment for the first
time incorporated a section on town planning (Part IX of CAP 137) (Quazi, 1986). In
1947, the enforcement of the development control regulations has been strengthened
by the formulation of the Town Board Enactment, 1947 (Cap 137). Cap 137 which
provides planning legislation in Part IX, empowers every Town Board to prepare a
general town plan for the area under its jurisdiction to be used as the basis of land
use zoning (JPBD Semenanjung Malaysia, 2002).
The general town plan as prepared according to Cap 137 was found to be purely
physical in its scope and was only confined to ensuring that new development
conformed to the prescribed plan. The system was argued not capable of coping with
the changing circumstances and insensitive to other socio-economic needs (Bruton,
1982; Quazi, 1986). These weaknesses have led to the formulation of TCPA (Act
172) in 1976. The Act marked an important milestone in the evolution and progress
of urban and land use planning in Malaysia (Goh, 1991; Wan Mohamad Mukhtar,
2004), though it is labelled as a copy or imported version of the 1971 British TCPA
(Goh, 1991; Abdul Munit, 1996; Zainah, 2007).
The Act introduces a new system of development plan, comprise SP and LP and
development control replacing provisions in Cap 137 (Wan Mohamad Mukhtar,
1996). In addition, the 1976 Act also represents an effort on the part of the
government to introduce a uniform planning legislation and comprehensive planning
techniques to be implemented by the State and LPAs in Peninsular Malaysia (JPBD
Semenanjung Malaysia, 2002).
The 1976 TCPA provides the responsibility for each State Authority to formulate and
implement a general policy in respect to the planning of the development and use of
all lands and buildings within the jurisdiction of every local authority (S. 3, Act 172). It
also provides the power to every local authority to act as a LPA (S. 5(1), Act 172).
Among the responsibilities of the LPA are to regulate, control and plan the
development and use of all lands and building within its area. Since its inception, the
Act has been amended four times, including the two major amendments in 1995 and
2001, to keep abreast with new developments and requirements of the activity of
land use planning (Wan Mohamad Mukhtar, 2004).
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The first amendment was in 1993 (through Act A866), aimed to conform to the
provisions of the Sewerage Services Act, 1993 (Act 508). In 1995, the second
amendment (Act A933) was done due to several environmental issues that occurred
in Malaysia at the particular period (Zainuddin, 1996). The third amendment in 2001
was cited as TCP (Amendment) 2001 (Act A1129). The amendment was in response
to the economic crisis that hit the country hard in 1997. The government felt that the
land use planning system through an integrated physical and resource planning
approach is best suited to assist in overcoming the economic crises through greater
control over the property development activity (Wan Mohamad Mukhtar, 2004). The
latest amendment (Act A1313) was in 2007, aimed to incorporate provisions of the
Solid Waste and Public Cleansing Management Act 2007 (Act 672).
The 1976 Act and its amendments were established and streamlined the system of
forward planning through a four-tier development plan, namely NPP, SSP, LP and
SAP. They also guided the activities of development control through the mechanisms
of planning control, development charge and appeal board. The planning
mechanisms provided by the legislations were continually used as tools to plan,
monitor and control the activities of land use and property development in Malaysia,
including for housing development (Alias, 2006).
2.4 The Implementation of Land Use Planning System in Malaysia
The implementation of the land use planning system is influenced by the provisions
of current planning legislations adopted by each country (Greed, 1996c). In
Malaysia, its implementation, as briefly discussed in the above section, is quite
similar as in the UK. It firstly deals with the activity of forward planning, through
preparation of development plans, followed by the activities of planning control.
Development plans become the basis for future development, while planning control
act as the control tool.
2.4.1 Preparation of Development Plans
The preparation of development plans begin at the National level through NPP,
followed by the SP prepared at the State level, and LP and SAP at the local level
(Figure 3). As a statutory mechanism, preparations of the plans, in terms of form,
content and procedure, are guided by the provisions of Act 172. It is important to
note that although the planning legislation in Malaysia is quite similar to the UK,
some of the practices in preparing development plans are more inclined towards the
US. The preparation of LPs, for instance, were frequently argued similar to the
concept of zoning plan as applied in the US (Asiah, 1999).
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Federal Department of Town and Country Planning, Peninsular Malaysia
Figure 3: Hierarchy and function of development plans in Malaysia
Source: Adapted from Wan Mohamad Mukhtar (2004:73).
a. National Physical Plan
The NPP focuses on the formulation of planning strategies and policies for the
development and use of land in the country, particularly in Peninsular Malaysia. Its
main function is to strengthen the national planning framework by providing a spatial
dimension to the national socio-economic policies as formulated in the Five-Year
Malaysia Plan and other national plans (Wan Mohamad Mukhtar, 2004). The other
functions of NPP are to coordinate sectoral agencies by providing the spatial
expression to sectoral policies, form the framework for the regional, state and local
planning and provide physical planning policies (Government of Malaysia, 2005).
In the process of formulating planning strategies and polices, the NPP has to identify
and consider several macro strategic issues related to various sectors from physical,
economic, environment and social development which was faced in the country
(Government of Malaysia, 2005). In the context of land use planning, the NPP has
provided a national planning direction to be implemented and enforced at the State
and local levels.
State Structure Plan
(SSP)
Local Plan
(LP)
Special Area Plan
(SAP)
Formulate planning strategies and policies at the National level to guide the planning activities at State and local levels.
Formulate planning policies and general proposals related to development and use of land in the particular State.
Formulate comprehensive development plan in the form of future land use zoning and implementation measures in the LPA areas.
Special plan to carry out a detailed treatment for development, redevelopment, improvement, conservation or for the purpose of management of certain areas.
National Physical Plan
(NPP)
NATIONAL
LEVEL
STATE
LEVEL
LOCAL
LEVEL
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b. Structure Plan
The national planning strategies and policies formulated by the NPP are
subsequently incorporated in the preparation of SSP which covers the entire area of
a respective State. The preparation of SSP enacted under the Act of A1129 basically
replaces the old version of SP which only covers the administrative areas of LPA.
The SSP focuses on the formulation of policies and general proposals related to the
improvement of the physical living environment, management of traffic and socio-
economic well-being, promotion of economic growth and facilitating sustainable
development (S. 8(3), Act 172). Its objective is to encourage integrated development
between the aspects of social, economy and physical in accordance with the national
development strategies and policies (Wan Mohamad Mukhtar, 1996).
There are seven closely related functions performed by the preparation of SP as
follows (JPBD Semenanjung Malaysia, 1981; Wan Mohamad Mukhtar, 1996):
(i) Interpreting national, state and regional policies;
(ii) Establishing aims, policies and general proposals;
(iii) Providing framework for local plans;
(iv) Indicating special area plans;
(v) Providing guidance for development control;
(vi) Providing basis for coordinating decisions; and
(vii) Highlighting main planning issues.
The preparation of SP either covers the LPA areas or the whole State were
perceived as a comprehensive planning tool to outline the physical and land use
development policies and strategies (Wan Mohamad Mukhtar, 2004). In other
perspective, Bruton (1982) assumes that SP was established as the strategic
planning vehicle which translates national social, economic and physical objectives
into a physical development strategy and provides a framework for the production of
more detailed local land use plans to guide the implementation of land use
development.
c. Local Plan
The implementation of land use planning is continued through preparation of LP and
SAP at the local level by LPAs. LP is prepared to translate and detail out the
strategies and policies set out by the SP (Hunud Abia and Ainul Jaria, 2004; Wan
Mohamad Mukhtar, 1996; 2004). It is specified in the Act 172, under Section 12(8)
that the LP‟s proposals must conform to the approved SP. Currently, in line with the
provision of the Section of 12(2) of Act 172, i.e. where a SP for the State has come
into effect, the LPA has to prepare the LP for the whole of its area.
The 2001 amendment Act has changed the approach of preparing the LP from urban
based to the LPA based. Nevertheless, in practice the LPA based LP has been
prepared simultaneously covering more than one LPA area in each district. Its
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rationales are to speed up the process of preparation, reduce the cost of study as
well as to enable the development information and proposals be coordinated for the
whole district. This new version of LP is known as the district LP (DLP) (Wan
Mohamad Mukhtar, 2004).
The principal aim of the LP as clarified by Hunud Abia and Ainul Jaria (2004) is to
prepare a comprehensive development plan in the form of future land use zoning and
implementation measures. Proposal of land use zoning, similar to the concept of
zoning plan as contained in the US‟s General Plan and Area Plan, exists in the
Malaysia‟s LP though its preparation originated from the UK‟s LP. Legislatively, the
LP should consist of a map and a written statement to formulate in detail proposals
for development and use of land, protection and improvement of the physical
environment, preservation of the natural topography, improvement of the landscape,
preservation and enhancement of character and appearance of buildings,
improvement of communication and management of traffic system (S. 12(3) of Act
172).
The scope and content of LP, besides guided by the provisions in Act 172, also need
to refer to the Development Plans (Structure and Local Plans) Rules 1985 and
several manuals, such as DP Manual 1981, Manual of Local Plan Preparation 1993
(LP Manual 1993) and its amended versions of 1999, 2001 and 2002. The common
functions of LP as stated in the DP Manual 1981 are as follows (JPBD Semenanjung
Malaysia, 1981):
(i) To apply the SP‟s development strategies and policies – LPs must conform to
the approved SP and develop the proposals and implementation measures;
(ii) To refine the SP‟s development control policies – LPs will refine the broad
guidance on development control as prescribed in the SP by allocating land
for specific development purposes, defining the areas to which particular
development control conditions will be applied and explaining conditions in
terms of standard and other criteria to enable the public and private sector
developers and property owners be equipped with a precise and clear
information;
(iii) To coordinate the land use and property development - Proposals in the LPs
can be used as a basis for coordinating and estimating public and private
development and expenditure; and
(iv) To highlight the local and detailed planning issues for public attention – LPs
will draw attention to more detailed planning issues in the planned areas.
Thus, it enables developers and property owners to be aware of how their
interests will be affected and where opportunities lie. This is done through the
consultation stage during the initial study and public objection stage after
finishing the draft of LP.
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d. Special Area Plan
The preparation of the SAP, which is the fourth tier of the development plan, is
enacted in Section 16B of Act 172. This provision provides responsibility for the State
Director of TCP or the particular LPA to prepare a plan for special area to carry out a
special or detailed treatment through development, redevelopment, improvement,
conservation or management practice. The understanding on SAP was further
elaborated in the Guideline of Special Area Plan, 2004 prepared by Federal TCPD.
The guideline defines SAP as a short-term development plan for implementation
purposes. The guideline also specifies that the main outcome of SAP is a
development action plan comprising of the layout plans and management plan for
development programmes, which include proposals for development phase, cost,
implementer agency and implementation approaches.
The SAP can be prepared during the preparation or upon the coming into effect of a
SP or LP. In terms of the preparation process, as stated in Section 16B(3), the SAP
should be prepared in the same manner as the preparation of a LP. In addition, it is
also stated in the provision that the SAP has the same effect like a LP. In general,
the SAP can act as a useful planning mechanism for LPAs to plan and manage
particular areas which need special development programmes (Wan Mohamad
Mukhtar, 1996).
2.4.2 Process and Procedures of Planning Control
Act 172 has introduced a mechanism of planning control to be enforced by the LPAs
to ensure the land use development is in line with the policy and proposals
formulated by development plans. Prior to 1976, planning control activities were
implemented according to Part IX (S. 145) of the Town Board Enactment. This
Enactment empowered the Board to refuse submission of plan for any new building
or any new private street, unless such plan is in conformity with the general town
plan (Ismail, 2003).
Act 172 empowers each LPA to control land use development within their areas
through the procedure of planning permission. In order to guide and enforce the
procedure, the Act firstly explained the definition of carrying out „development‟ that
requires planning permission. Under the Section 2(1), „development‟ was defined as
“carrying out of any building, engineering, mining, industrial or other similar operation
in, on, over, or under land, the making of any material change in the use of any land
or building or part thereof, or the subdivision or amalgamation of land”. The definition
is basically quite similar to the one legislated in the UK planning legislations.
In line with the definition, all development applications, including housing
development, need to go through the procedure of planning permission and must first
obtain approval from the LPA before it is permitted to be developed (Alias, 2006).
This requirement is also in accordance with the provision of Section 19(1) which
stated that “no person, other than a local authority shall commence, undertake, or
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carry out any development unless planning permission in respect of the development
has been granted to him”. The provision explains that all development activities are
prohibited except after the planning permission to carry out development is obtained
from the approving authority.
In enforcing planning control, reference need to be made to the proposals and
implementation measures, including proposal for future land use zone, stipulated in
the LP (Alias, 2006). This requirement was legislated under Section 18(1) which
states that “no person shall use or be permitted to use any land or building otherwise
than in conformity with the local plan”. Besides LP, Act 172 under Section 22(2) also
provides other matters that the LPA should take into consideration when dealing with
any application for planning permission. This includes:
(i) Provisions of structure plan;
(ii) Directions given by the SPC (including guidelines, standards and other
planning requirements approved by the SPC);
(iii) Provisions that the LPA thinks are likely to be made in any development plan
under preparation or to be prepared;
(iv) Development proposal report (DPR); and
(vi) Objections by the neighbouring land owners (Section 21, Act 172).
In relation to the approval of planning permission, it is stipulated in Act 172 that the
LPA, after taking into consideration all matters under Section 22(2), may grant
planning permission either absolutely or subject to conditions as LPA thinks fit to
impose, or refuse to grant planning permission (S. 22(3)).
With regard to the process and procedures for the planning application, it is specified
in the Act that such application need to be submitted to the LPA together with the
documents, plans and fees as stipulated in the Planning Control (General) Rules
(PCGR) enacted by each State. The DPR, in addition to the documents and plans
required, also needs to be submitted by the applicants.
Similar to the preparation of development plans, the implementation of planning
control in Malaysia was also debated, particularly in terms of considerations for
decision making, efficiency and its effectiveness. Asiah (1999) highlights that
discretionary practice by the decision makers exist in making decision for planning
permission, though legislatively decisions should be made in accordance with the LP
and other requirements stipulated in Act 172.
Asiah (1999), however, does not see the practice as negative on the reason that
discretion and opinions of the approving authority in considering planning
applications may contribute to a better decision, compared to referring only to the
proposals of development plans. Similar view is shared by Foziah (2002) by arguing
that as the outcomes of LP are still not fully achieved as expected by the planning
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legislation, it is rational for the approving authority to practise discretionary in
deciding planning decisions. In relation to the efficiency and effectiveness of the
planning control procedures, Mohd Anuar (1991) who studied the development
control system in Johor Bahru, revealed that there are many aspects, such as
certainty, time factor, procedure, administration, accountability and coordination
which are still inefficient and ineffective.
2.5 Rationale for Land Use Planning to Intervene in the Development
Process
As a form of government intervention, land use planning has a specific function to
intervene in the development process albeit most of the activities in the process are
dominated by the private sector (Solesbury, 1974; Ball, 1983; Adams, 1994; Lambert,
1996). This is in line with the view by Pearce (1992) who describes that the goals of
development will be effectively achieved through an intervention by land use planning
system. Through such intervention, resources in the development process can be
distributed more fairly (Healey, 1983). The intervention also helps to produce a better
urban environment and facilitate economic growth than that which could be
generated by the market alone (Adams, 1994; Greed, 1996c).
Although there are many reasons for land use planning to intervene in the
development process, the central rationale basically focuses on the failure and
imperfection of the market system in operating the process. Solesbury (1974),
Healey (1983) and Adam and Watkins (2002) note that the market alone fails to
allocate resources effectively. In particular, the market fails to provide public goods
such as public amenities, control the impact of externalities or provide services
unattractive to private enterprise (Solesbury, 1974). Yitachel (1989) similarly
expresses that land use planning intervention will helps in shaping market behaviour,
enhance equity, efficiency and sustainability in the built environment that would
otherwise be generated by the market.
In relation to this, Adams (1994) contends that urban land use development should
be plan-led rather than market-led. According to Adams (1994), plan-led does not
mean that land use planning should replace the market but work through it. This
argument is supported by Self (1998) and Ractliffe and Stubbs (1998) who pose that
land use planning should not only follow market trends but play a role to justify and
assist the market to become more efficient. Even, Frieden (1989) and Campbell and
Fainstein (1996) see land use planning as helping the market along.
The capability of land use planning to intervene effectively in the development
process, however, was argued in many angles. Adams (1994) and Greed (1996d)
argue that although land use planning intervention is needed to overcome the market
imperfections and failure, there is still not enough evidence to indicate that land use
planning produces better outcomes than market operation. Pearce (1992)
addresses that the failures in the market process have not been properly tackled by
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the land use planning system. Even, according to Healey (1993) the operation of
markets is given little attention in the operation of land use planning.
In another perspective, Campbell and Fainstein (1996) elaborate that although land
use planning intervention is substantial in replacing the chaos of the market, there
were also views which hold the reverse belief that the market should replace the
chaos left by the planning. The argument arises due to assumption that land use
planning system itself creates inequalities and inefficiencies in the development
process (Pearce, 1992).
In view of the arguments, Adams (1994) suggest the planners as one of the actors in
development process to facilitate the renewed search for better land use planning
intervention by grasping the values and behaviours of the market operations. In other
words, land use planning should be more responsive to the market fundamentals by
understanding the market demand factors in the property development process
(Hague et al., 2006).
In practice, there are many ways where land use planning can intervene in the
development process. It is not only limited to the development control activity to
monitor and approve the planning permission as indicated in most models of event
sequence development process, but also involved other planning instruments, such
as development plans and development promotion. In brief, development plans
provide a context for control decisions by stating the strategies and principles that the
planning authority should adopt in seeking to manage land use change. A
development plan also indicates where an authority wishes to encourage
development by allocating land for specific uses. Such guidance provides a
framework for the land market by helping the developers to know in advance, what is
likely to be acceptable on their own land as well as on neighbouring land (Adams,
1994).
As for development control, as a main activity in the development process, it provides
an administrative mechanism for the planning authority to exercise discretion on
specific development proposals by deciding in each case whether to uphold the
development plan or depart from it. Development control thus enables landowners,
developers or investors to challenge the development plan, after it adoption. The
planning authority may try to control the form of a development process as well as its
location, specifying requirements for matters such as access, design, development
time-frame, quantity required and external appearance (Adams, 1994).
The development promotion which is accepted as one of the land use planning
activities, particularly in the UK‟s planning framework also plays a significant role to
enable land use planning interacts with the development process (Adams, 1994).
Through the activity, it helps authorities to seek opportunities and potentials to
stimulate development and investment within their areas by promoting and marketing
locations, making land available to developers and providing grants and subsidies.
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The significance of land use planning system in development process will be further
elaborated in the next section by exploring its relationship and roles in the context of
housing development, particularly in relation to the process of planning and
controlling of housing supply.
3.0 LAND USE PLANNING SYSTEM AND HOUSING SUPPLY PROCESS
This section emphasises on the relation between the land use planning system and
the aspect of housing supply. Attention is given to understand the relationship of land
use planning operation and market system operation, the roles of land use planning,
requirement to fulfil housing needs and housing demand and the importance of
market demand criteria in the process of housing supply.
3.1 Relationship Between the Operations of Land Use Planning and Market
System in Housing Supply Process
The land use planning system through the mechanisms of development plan and
planning control and the market system as operated in the housing production
process are among the systems which exist and influenced the structure, process
and outcomes of housing supply (Bramley et al., 1995; Golland, 1998). According to
Maclennan (1991), Healey (1992) and Adams and Watkins (2002), the operation of
the systems, in relation to the production of housing supply, are not separated but
interrelated and complement each other. The argument is supported by Rydin
(1993), von Einsiedel (1997) and Bramley (2003). Rydin (1993) stresses that the
housing development goals can only be achieved through a good interaction
between the operation of land and housing markets by house-builders with the
activities of land use planning administered by local authorities.
Von Einsiedel (1997) argues that although most of the activities in housing
production process are shaped by the market forces, the planning system also has a
specific role especially in governing the approval of housing supply. Indeed, von
Einsiedel (1997) perceives that both the demand and supply in housing market are
affected by the regulatory, institutional process and policies set by the land use
planning system.
Bramley (2003), on another perspective, clarifies that the approval of housing supply
as determined at the planning stage becomes a basis for the successfulness of the
operation of housing market system. Bramley‟s argument meant that if the housing
supply is properly planned, controlled and approved by the land use planning
mechanisms, it will help the housing market system to operate efficiently. That is, it
is difficult for the housing market system to operate efficiently without the proper
planning of housing supply.
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With regard to the role of the market system, theoretically in laisser-faire economy,
the system should be operated to achieve equilibrium between demand and supply
(Maclennan, 1982; Harvey 1993; Adams, 1994; Bramley 1996; Nicol, 2002).
However, in the actual operation of housing market, it often fails to provide a
balanced situation between demand and supply (Bramley, 2004). Imperfection of the
housing market system which is distorted by external influences, such as speculation
activity by housing developers, vagueness and incomprehensiveness of housing
policies set by the authority, changes in finance policy and interest regulation as well
as volatility in macro and micro economic performance had contributed to the market
failure (Adams, 1994). Moreover, inadequate information about needs and demands
for future housing development supplied by land use planning activities was also
argued to have contributed to housing market failure (Bramley et al., 1995).
As the result of imperfection and failure, the housing market will be in a perpetual
state of disequilibrium, where a balance between supply and demand is difficult to
achieve. Even, Adams (1994) argues that it is never achieved. According to Adams,
the housing market has always moved from shortage to overprovision and back to
shortage. In the situation of imperfection and failure of the housing market, Rydin
(1993) and von Einsiedel (1997) stress that it is justified for the land use planning to
rectify the failure by properly governing the process of planning and controlling of
housing supply.
According to Healey (1983), the land use planning system can play a role to
overcome the housing market failure by providing a development framework within
which market can operate, removing the uncertainties of the unfettered market. In
addition, Rydin (1993) suggests that land use planning should play its role to gather
information about future trends and regulating the supply of housing land to prevent
such speculative swings in new housing supply.
The relationship between land use planning, as a government intervention tool and
the housing market system may also be reviewed in a broader perspective,
particularly in the context of institutional and political economy of housing
development. In the institutional context, the relations between government and
market, within which planning system operates, have faced criticism. Planning is
often criticised for being insufficiently aware of the impact of its policies on the market
(Healey 1992; Adams and Watkins, 2002) and relatively unresponsive to market
demand in the way that it supplies new housing (Bramley et al., 1995).
In the light of this, Moor (1983), von Einsiedel (1997) and Satsangi (2000) highlight
that to improve housing delivery system and to ensure its development goals are
achieved, planning should be more concerned on how the housing market works as
well as the results of its operation. Through understanding how the housing market
works and how it fails, it gives land use planning a powerful set of lever to improve
the performance of the housing sector (von Einsiedel, 1997).
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The market
The Government Equity
Quantity
Space
(Location)
Choice
In the context of political economy of housing development, the government through
land use planning system is seen as a solution to the housing development problems
and the market as a way of meeting housing development objectives. This can be
understood through examining the conceptual model developed by Golland and
Gillen (2004) as in Figure 4 below.
Figure 4: Conceptual model of the political economy of housing development
Source: Adapted from Golland and Gillen (2004:67)
The model shows that the pressures on quantity, choice, space or location and equity
in housing development can be absorbed through the interrelationship of the
„government‟ and „market‟ mechanisms. In the model, Golland and Gillen (2004)
clarify that the close relationship between both mechanisms or „government-market
mix‟ are integral to enable housing developments be managed properly.
Furthermore, both mechanisms also need to play their roles effectively because any
mistake will give an effect to the operation of the other mechanism. For example,
new policy decisions related to housing land use zoning formulated either by the
state or local governments may affect the market for housing lands. The uncontrolled
market in releasing housing land, similarly give an effect and restrict the government
to enforce its housing policies effectively (Rydin, 1993).
The discussion above indicates that a close relationship between the operation of
land use planning and the operation of market system are necessary to ensure the
process of housing development, particularly in relation to the aspect of supply, is
carried out efficiently and effectively. The significance of housing market system will
be detailed out in section 3.4 by exploring the criteria of market demand that need to
be considered in planning housing supply.
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3.2 The Role of the Land Use Planning System in Housing Supply Process
The system, activity and mechanisms of land use planning play a pivotal role in
housing development to ensure development is carried out in a sustainable manner
and its process is operated effectively (Ball, 1983; Golland and Gillen, 2004). The
land use planning‟s role in relation to the aspect of housing supply is not only limited
to fulfilling the goal of meeting housing needs but also to encourage and ensure
efficiency in the system and operation of housing market (Greed, 1996c; Chan, 1997;
von Einsiedel, 1997).
As mentioned in previous discussions, there are two main activities, other than
implementation or promotion that adhered to the land use planning system, namely
forward planning and development control (Bramley et al., 1995; Greed, 1996;
Ratcliffe et al., 2004). For housing development, it also has to go through similar
process, from conducting housing planning activities to controlling of new housing
development applications. It ends with the development of the housing schemes,
either by the government bodies or by private developers (Alias, 2006).
In relation to the role of land use planning in the housing supply process, Short et al.
(1986) views it as a system of negotiation which results in a set of rules governing
access to land and to housing before it is surrendered to the market operation.
According to Rydin (1993), the land use planning system should allocate sufficient
land for future housing supply requirement and then responds accordingly to each
housing planning applications.
In practice, the housing planning process begins with the forward planning activities
through preparation of development plans. The development plans will formulate
housing policies and determine future housing requirements. This is subsequently
followed by the process of development and planning control which become an
important stage in the overall housing production process. At this stage, housing
development applications will be assessed by the planning authorities before
development is permitted (Figure 5).
In broad, it becomes a key function of land use planning to allocate adequate land for
new development according to planned assessment of the housing needs and to
coordinate these land allocations with supporting infrastructure (Lambert, 1996;
Carmona et al., 2003; Blake and Collins, 2004). With regard to this, within the
regulatory ambit of the land use planning system, there are two dominant discourses
wrapped around the decisions regarding allocation of land for housing. The first is the
amount or quantity of new-build required and the intensity to which land should be
developed. The second concerns the marketability of the land supply released by
local authorities in their housing land availability schedule (Hull, 1997).
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Federal Department of Town and Country Planning, Peninsular Malaysia
Housing Planning
Control Process
Housing Market Operations by
Developer
Preparation of Development
Plans
Site Appraisal and
Feasibility Study
Building Design and Approval
Contract and
Construction
Monitor, control and approve new
housing supplies
Formulate housing policies
HOUSING PLANNING PROCESS
FORWARD
PLANNING HOUSING PRODUCTION PROCESS
DEVELOPMENT CONTROL
Determine future housing requirement
(land allocation, quantity and
location)
Figure 5: The role of the planning system in housing supply process
Sources: Adapted from Ractliffe et al. (2004) and Alias (2006)
The concern about marketability basically relates to where the housing lands should
be allocated (Satsangi, 2000). This requires consideration as to where and how to
allocate suitable locations for current and future housing development. Ball (1983)
and Adams and Watkins (2002) perceive that the land use planning system can play
a significant role in this aspect by determining potential areas and specific localities
for future housing and considering the expected future market demands. This
argument is supported by Blake and Collins (2004) by stating that the professional
planning decisions will help in shifting systematically the „floating‟ demand for homes
into a specific geographical spaces and marketable locations.
The matters of land allocation, quantity and location for housing has attracted
Carmona et al. (2003) to debate further. According to Carmona et al. (2003), the
philosophy of „predict and provide‟ as previously adopted by the UK‟s housing
planning had forced local authorities to comply to the housing numbers predicted at
the national and regional levels, to deliver their allocation in advance of demand. This
system arguably contributed to the provision of housing in the wrong type and
quantity and caused the locational mismatches between the supply of and demand
for housing. The introduction of the „plan, monitor and manage‟ system in the UK was
perceived as a responsive approach to planning for housing in the right type and
quantity and in the right locations (Carmona et al., 2003). This new system has led
LPAs to endeavour to meet the best housing requirement for local population (Adams
and Watkins, 2002).
The fundamental of the system of „plan, monitor and manage‟ was incorporated in
the revised version of Planning Policy Guidance (PPG) No. 3 (Housing). The PPG
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Federal Department of Town and Country Planning, Peninsular Malaysia
outlines a range of clear objectives for the land use planning system to manage
housing development, requiring LPAs to (DETR, 2000):
(i) Plan to meet the housing requirements for the whole community, including
those in need of affordable and special needs housing;
(ii) Provide wider housing opportunity and choice and better mix in the size, type
and location of housing;
(iii) Provide sufficient housing land but give priority to reusing previously
developed land within urban areas, bringing empty homes back into use and
converting existing buildings, in preference to the development of greenfield
sites; and
(iv) Make more efficient use of housing land by reviewing planning policies and
standards.
The PPG was translated into practice by concentrating on housing developments
within urban areas, making more efficient use of land by maximizing the reuse of
previously developed land, adopting a sequential approach in allocating land for new
housing development, managing the release of housing land and reviewing existing
allocations of housing land in development plans and planning permissions when
they come up for renewal (Carmona et al., 2003).
An effort to allocate adequate land and quantity for housing in the right type and at
the right place, other than to meet housing needs was also given attention in
Malaysia. Various plans at the Federal level such as the Five-Year Malaysia Plan,
National Housing Policy, National Urbanisation Policy and NPP are found to have
touched these aspects. The SP and LP prepared at the State and local levels also
addressed the aspects substantially through formulation of policies, strategies and
measures to ensure land and quantity of housing supply is allocated adequately in
the suitable locations (Asiah, 1999; Ibrahim, 2008).
3.3 Requirement to Fulfil Housing ‘Needs’ and ‘Demand’ in the Planning of
Housing Supply
In conducting the housing planning activities, either during the preparation of
development plans or at the stage of planning control, it becomes a nature of land
use planning to fulfil the objective of meeting housing needs (Ratcliffe, 1981; Golland
and Gillen, 2004; Ibrahim, 2008). Housing needs, according to Chander (1976),
Ratcliffe (1981), Noraini (1993) and Golland and Gillen (2004) means the quantity of
housing that is required to provide an adequate housing to the population without
taking into consideration an individual household‟s ability to pay.
Housing needs is associated with adopting „global‟ housing provision, into a
prediction of a number of households that will require housing in future. It is based
upon population projection which are employed through specific population modelling
method (Nicol 2002). According to Pearce (1992), the housing planning goal is
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Federal Department of Town and Country Planning, Peninsular Malaysia
considered achieved if the planning decision ensures an adequate and continuous
supply of housing needs.
The nature of housing planning which focuses on meeting housing needs, however,
had raised several arguments. Nicol (2002) argues that meeting housing needs alone
is insufficient to achieve a more integrated and responsive housing supply. Nicol
(2002) suggests the housing planning process to take into consideration as well the
aspects of housing demand. The term housing demand is usually associated with
the requirement of individual households over and above the basic or minimum level
of provision or „needs‟ (Golland and Gillen, 2004), supported by the household
willingness to pay for housing (Noraini, 1993). By considering the ability to pay which
is actually backed up by the purchasing power of each household, it reflects the
situation of actual demand for housing which is technically defined as effective
demand (Adams and Watkins, 2002; Golland and Gillen, 2004).
Determination of housing demand is also associated with the housing choice
required by the households (Golland and Gillen, 2004). As explained by Golland and
Gillen, demand for choice can be distinguished by housing tenure (e.g. social-rented
sector or private-rented sector), type of housing (e.g. detached, semi-detached,
terraced or flat), form of housing (e.g. material used and the way in which housing is
constructed, whether in the traditional or in the pre-cast concrete way) and the
method of development of new homes.
Choices for housing demand also takes account of market conditions reflected in
terms of selection by price and location preferences (Ratcliffe, 1981; Thrall, 2002).
Thus, income and ability to pay are the critical factors and it can easily be argued that
those households with the highest incomes have the greatest housing „choice‟
(Golland and Gillen, 2004). In this context, housing demand is ultimately an issue
which tells us more about the choices which households make in moving house or in
gaining access to a new dwelling.
In the light of the above and in order to ensure the local housing requirement is
adequately met, the housing planning process should recognise that the housing
requirements are not only driven by population trend but also by the affordability
and choices of each household. With regard to this, Golland and Gillen (2004)
suggest that in estimating the actual requirement for housing, it is necessary to take
account of household‟s income, their ability to pay, their preference in terms of price
and location and their choice in terms of tenure, types, form and method of housing
to be developed.
The suggestion is concurred by Nicol (2002) who suggests that the concept of
housing requirement should be viewed at two separate levels. The first is in terms of
overall housing requirements so called broad housing needs. The second level is the
determination of the degree to which the households require certain house types,
prices, locations and tenures.
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Federal Department of Town and Country Planning, Peninsular Malaysia
The significance of those aspects has been recognised in the housing planning
process in the UK and other European countries. Boelhouwer and van der Heijden
(1992) and Golland and Oxley (2004) clarify that formulation of housing policy in
European countries has been increasingly directed towards improving housing
choice rather than quantity by trying to meet the aspirations of households wanting
to own homes. In the UK, since early 1980s, the formulation of housing policies has
changed from previously focussing on meeting broad housing needs to one which is
focusing on and addressing the specific demands of households (Golland and Gillen,
2004).
3.4 The Importance of Market Demand in the Planning of Housing Supply
Besides factors related to the effective demand and housing choice, the criteria of
market demand should also be considered as a significant factor in the planning of
housing supply. As discussed by Bramley et al. (1995), the housing market demand
criteria consist of several elements, such as local housing market conditions and the
expected house buyer preferences in terms of price, location and type of housing.
The importance of these criteria has attracted support from Hull (1997) who argues
that the process of forward planning and production of housing still suffers from lack
of reliable information on the market indicators and current flow between the housing
market and the levels of investment in the housing stock.
Hull (1997) also stresses that apart from playing a role in meeting housing needs and
housing demand, the forward planning and development control process should also
look at the importance of the market demand criteria, especially on the aspect of
marketable location. This statement is in line with the view by Pearce (1992), who
clarifies that although the planning goal in meeting adequate housing needs is
considered as has been fulfilled, any planning decision in supplying new houses also
has to respond to the situation of current market demand.
The importance of incorporating the market demand criteria in housing planning
process is also addressed by Ball (1983) and Bramley (1995). Ball and Bramley
suggest the land use planning system should have a greater degree of awareness of
the housing market by incorporating policies and procedures in a way sensitive to the
need of the market. Pearce (1992) and Nicol (2002) also highlight that it is a
responsibility of the planning authorities to have an adequate understanding of
housing market before making any decision in releasing new housing supply. Similar
point is addressed by Golland and Gillen (2004) by clarifying that it is necessary for
the housing planning process to understand the consumer‟s „taste‟ of the housing
market. Stressing on the above arguments, Healey (1992) proposes three
approaches in achieving the housing planning goals by the planning system
consisting of following the market, managing the market and creating the market.
According to Adams (1994) and Lambert (1996), the market demand criteria need to
be monitored right up to the start of housing planning process in the development
plans. In relation to this, Moor (1983) suggests the need for planners, as the main
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Federal Department of Town and Country Planning, Peninsular Malaysia
actor in the development process, to be more aware of the market conditions and
trends and put forward some changes in practice, especially in the preparation of
development plans and planning control process. The preparation of LP and planning
control, in particular need to be more sensitive to the nature and pressures of market
demand by understanding the boundaries of local and neighbouring housing
markets, the structure of sub-market as well as the trend of current and future
markets (Adams and Watkins, 2002; O‟Sullivan, 2003).
4.0 HOUSING DEVELOPMENT PROCESS IN MALAYSIA
Housing development in Malaysia is carried out by both the public and the private
sector through the concepts of `sell and build‟ and `build then sell‟. The public sector
(through National Housing Department, Syarikat Perumahan Negara Berhad and
other government agencies) concentrates mainly on low-cost and affordable housing
while the private sector (private housing developers), apart from complying with the
30 percent low-cost housing provision, concentrates on medium-cost and high-cost
housing developments. The Malaysian government has also formulated a housing
policy which aims to strengthen the involvement of private sector in housing
production and delivery (Asiah, 1999; Ibrahim, 2008).
The development of housing is given an emphasis in various plans at the federal,
state and local levels. At the federal level, the current and future housing requirement
are planned and targeted through the five-year Malaysia plans, NPP and NUP.
Various housing policies have also been formulated in the plans to guide the process
of housing development at the state and local levels. One of the prominent policies in
the plans is to ensure all Malaysians have an access to adequate shelter and related
housing facilities (Ahmad Zakki, 1997; Chan, 1997a; Goh, 1997b; Asiah, 1999). At
the state and local levels, the development of housing is planned through the
preparation of SP, LP and SAP. It is also guided by various housing policies and
guidelines formulated by the State Authority and planning authorities (Alias, 2006).
The process of housing development in Malaysia is very complex and highly
regulated (Chan, 1997b; Asiah, 1999). As shown in Figure 6, after acquiring the land,
there are many stages of approvals regulated by various laws and rules of different
agencies which need to be obtained by housing developers (Tan, 1996; KPKT, 2002;
Alias (2006); Ibrahim, 2008). Among them are:
(i) The approval of land development applications (conversion, sub-division and
amalgamation) by the State Authority (enacted under the NLC, 1965);
(ii) The approval of planning permission by LPA (under the Act 172);
(iii) The approval of building plan by local authority (under the Street, Drainage
and Building Act, 1974);
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Federal Department of Town and Country Planning, Peninsular Malaysia
(iv) The approvals of earthwork plan (under the Street, Drainage and Building Act,
1974) and landscape plan by local authority;
(v) The approval of developer‟s license by the MHLG (under the Housing
Developers (Control and Licensing) Act, 1966);
(vi) The approval of advertisement and sales permit by the MHLG (under the
Housing Developers (Control and Licensing) Rules, 1989); and
(vii) The approval of certificate of fitness for occupation (CFO) by local authority
(under the Street, Drainage and Building Act, 1974) or the issuance of
certificate of completion and compliance (CCC) by qualified professionals.
Previously, all the approvals have to be applied separately (step-by-step), but with
the formation of one stop centre (OSC) at every local authority beginning June 2007,
the applications for the planning permission and other plans can be submitted
simultaneously through the centre. This initiative formed by the government is aimed
to speed up the process of getting an approval and to enhance the delivery system in
housing development process (Tan, 2007).
The applications will involve the appointment of various consultants, such as land
surveyor, town planner, architect, engineer and landscape architect to prepare a
survey, layout, building, earthwork, drainage and sewerage and landscape plans. It is
important to note that although the applications are submitted concurrently to the
OSC, their approvals are still granted separately, except for small-scaled projects
(particularly flatted housing projects) of which the lands have already been granted
conversion and sub-division approvals. Before the decision is made to each
application by the OSC Committee, various technical agencies will be referred for
comments and advice to ensure the housing development proposals are in line and
comply with the technical requirements of each agency.
After getting an approval of planning permission, the developer has to submit the
application for conversion and sub-division (or surrender and re-alienation) to the
State Land and Mines Office (through the District Land Office) for the consideration
of the State Executive Council (EXCO).
The decision for building plan and earthwork plan applications will only be made by
the OSC Committee after the application for conversion and sub-division is approved
by the State EXCO. The approval of building plan will help the developer to apply the
housing developer‟s license and the advertising and sales permit from the MHLG.
Simultaneously, the developer (through land surveyor) may conduct a detailed
survey and prepare a pre-computation plan for the approval of the District Land
Office or the State Land and Mines Office.
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Federal Department of Town and Country Planning, Peninsular Malaysia
Figure 6 : Housing Development Process in Malaysia
Sources: Adapted from Tan (1996), Chan (1997a), KPKT (2002; 2007) and Alias (2006)
Application for Foreign Investment
Committee (FIC) Approval
Feasibility Study Acquisition of Land
Appointment of Consultants
Land Surveyor (Survey Plan)
Simultaneous Submission to the One Stop Centre (Local Authority)
State TCPD Economic Planning
Unit Dept. of Irrigation Health Dept. Public Works Dept. Waterworks Dept. Telecom Malaysia Tenaga Nasional
Berhad Water Supply Dept. District Land Office Labour Dept. Dept. of Environment Fire Brigade Dept. Internal Divisions of LA
District Land Office / State Land & Mines Office
State Executive Council (EXCO)
Project Planning Contract Administration Finance and Control
Sales Administration
Issuing of CFO or CCC
Town Planner (Layout Plan)
Architect (Building Plan)
Engineer (Earthwork Plan)
Landscape Arch.
(Landscape Plan)
Application for Conversion and Sub-division (or Surrender and Re-alienation) Approval
Conversion and Sub-division Approval
Application of Planning Permission Application of Building Plan
Application of Earthwork Plan Application of Drainage & Sewerage Plan
Application of Landscape Plan
Land Surveyor (Detailed survey and Prepare
Pre-com. Plan)
District Land Office / State Land & Mines Office
Approval of Pre-comp. Plan and Issuing of Qualified Titles (Q.T.)
Application of Developers License (from MHLG)
Application of Advertising and Sales Permit (from MHLG)
Delivery of Vacant Possession
Planning Permission Approval (OSC Committee) Endorsement by
the LA‟s Full Council Meeting
Sales and Construction
Building and Earthwork Plans Approval (by OSC
Committee)
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Federal Department of Town and Country Planning, Peninsular Malaysia
After all the approvals are granted, the next step is to start the sales and
construction. The sales activity requires the developer to decide the selling price for
all types of houses, make a continuous marketing and advertising to promote and to
attract buyers, and administer matters related to finance (facilitating buyers to get
end financing from financial institutions), sales agreement and transferring of land
title from the developer to individual titles for each housing buyer.
The construction stage is the most crucial stage in the process of housing
development. This stage requires the developer to manage the project planning
(scheduling, budgeting and progress monitoring), contract administration (tender
documentation, selection and contract) and finance control (bridging and end
financing) systematically (Dani, 2009). Consultants and contractors involved in the
housing project also need to be mobilised efficiently to ensure it is completed within
the determined period. According to the Housing Developers (Control and Licensing)
Rules 1989, the developer has to deliver the vacant possession of the landed
housing within 24 months of the signing of the agreement. This means developers
could not go beyond 2 years of the construction period. After the completion, all the
housing units need to be handed over to the purchasers. However, no occupation of
a dwelling is allowed until and unless a CFO or CCC is issued.
There are many issues in the process of housing development in Malaysia that can
be explored. The problems of delay, bureaucracy and lack of co-ordination in the
approval process are among the issues that are frequently related to the process.
This paper however, will not touch the issues in detail. The concern is more on the
aspect of planning and controlling of housing supply, which is also one of the
important components in the whole process of housing development.
5.0 HOUSING PLANNING PROCESS IN MALAYSIA
The preparation of development plan and implementation of planning control in
Malaysia have an equal role in the planning and controlling of housing supply. The
planning for housing supply begins at the national level through the preparation of
NPP, followed by SP at the state level. The process of planning of housing supply
continued at the local level through the preparation of LP and SAP. The outcomes of
the plans will be used as guidance by the LPAs to control and approve the
applications of housing development.
5.1 The Planning of Housing Supply
As mentioned in the previous sections, the development plan plays an important role
in planning the development of urban land uses. In the planning of housing land use,
there are five main purposes that should be performed by development plan (Prior,
2000):
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Federal Department of Town and Country Planning, Peninsular Malaysia
(i) To coordinate the provision of major housing development with other land use
activities;
(ii) To provide a clear framework for development control decisions and guidance
to those proposing development;
(iii) To provide some certainty to those seeking planning permission;
(iv) To act as promotional documents indicating locations of development
opportunities; and
(v) To steer development onto land most suited for it.
These points will be discussed in this section by exploring the process and activities
carried out by the development plans in Malaysia in relation with housing supply
planning. It covers the outcomes, strategy and policies as contained in the NPP,
followed by the process and activities of housing planning in both structure and local
plans. The role of SAP in this aspect is intentionally excluded considering its
preparation process and procedure are similar to the preparation of LP.
5.1.1 The National Physical Plan: Outcomes, Strategy and Policies on
Housing Supply
Housing represents one of the main sectors in the preparation of NPP. In this plan,
the activities of housing sector include the following aspects (JPBD Semenanjung
Malaysia, 2003b):
(i) To identify the existing stocks and distribution of housing units by categories
and states in Peninsular Malaysia;
(ii) To identify the current issues and problems of housing development faced by
the nation;
(iii) To project the total national housing units and land requirement for housing
development up to year 2020 by state; and
(iv) To recommend the necessary strategies, policies and implementation
measures to be adopted to accommodate for the issues and problems
identified.
In line with the above scope, the NPP‟s housing study, similar to other development
plans, emphasises on analysing the existing housing conditions, examining
committed housing developments, projecting future housing requirement and
formulating strategy and policies to streamline and strengthen the housing
development. There are several strategies and policies that touched on matters
relating to the planning and controlling of housing supply.
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Federal Department of Town and Country Planning, Peninsular Malaysia
a. The Outcomes on Housing Conditions, Committed Development and
Projection
The NPP reveals that, in 2000, all states in Peninsular Malaysia faced the issues of
surplus of existing housing supply and high rate of committed development. This can
be seen in Table 1 where the total housing supply (existing and committed units) has
amounted to 5,338,000 units compared to the total housing need in the same period
which is only 3,941,200 units.
Table 1: Comparison between the total housing supply and the total housing need
in Peninsular Malaysia, 2000 – 2005
STATE / REGION
HOUSING SUPPLY HOUSING NEED Total Surplus (2000)
Total Surplus / Shortfall (2005)*
Existing Units (2000)
Committed Units (2000)
Total Supply (2000)
2000 2005
Perlis 44,900 4,700 49,600 43,500 47,400 6,100 2,200
Kedah 365,100 45,800 410,900 351,000 398,100 59,900 11,900
Pulau Pinang 334,300 21,700 355,900 279,500 322,700 76,400 33,200
Perak 520,700 136,200 656,900 436,400 484,900 220,500 172,000
Northern Region
1,265,000 208,400 1,473,300 1,110,400 1,253,100 362,900 219,300
Selangor 882,700 303,200 1,186,000 891,200 1,126,400 294,800 59,600
Kuala Lumpur 323,100 54,900 378,000 293,500 351,300 84,500 26,700
N. Sembilan 230,300 122,200 352,500 183,000 201,700 169,500 150,800
Melaka 164,700 26,900 191,700 135,300 151,300 56,400 40,400
Central Region 1,600,000 507,200 2,108,200 1,503,000 1,830,700 605,200 277,500
Johor 652,600 304,000 956,600 583,100 671,000 373,500 285,600
Southern Region
652,600 304,000 956,600 583,100 671,000 373,500 285,600
Pahang 276,400 43,100 319,600 274,100 303,400 45,500 16,200
Terengganu 176,700 20,000 196,700 191,200 225,100 5,500 (28,400)
Kelantan 257,800 25,800 283,600 279,400 299,600 4,200 (16,000)
Eastern Region
710,900 88,900 799,900 744,700 828,100 55,200 (28,200)
Peninsular Malaysia
4,229,300 1,108,500 5,338,000 3,941,200 4,583,000 1,396,800 755,000
Note *: The figure for total surplus/shortfall of housing supply for 2005 is based on
comparison with the total supply in 2000 without considering of any new committed units from 2001 – 2005. The figures, which were presented in the NPP report, are intentionally highlighted to describe the scenario of housing oversupply faced in Peninsular Malaysia.
Source: Adapted from JPBD Semenanjung Malaysia (2003b)
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Federal Department of Town and Country Planning, Peninsular Malaysia
These figures indicate that around 1,396,800 units are actually an oversupply. Similar
situation existed in 2005 in which some 755,000 housing units are identified as
oversupply in the Peninsular Malaysia. The State of Johor, Selangor, Perak and
Negeri Sembilan are among the states experiencing high oversupply rate in both
periods. For the State of Johor, the housing oversupply in 2000 was calculated at
373,500 units which is a surplus of 64.0 percent from the total housing need.
In addition, it is also highlighted in the NPP that the housing oversupply occurred due
to over commitment of housing approval by LPAs. With regard to this, the NPP
assumes the weakness of the present housing approval system together with the
failure of property market operations as the main contributing factors to the issue.
Simultaneously, it is also addressed in the NPP that if the oversupply situation
continue to exist, it will not only increase the rate of property overhang and
abandoned housing projects, but also contribute to the uneconomic use of public
funds, inefficient use of existing network of infrastructure and utility services and
ultimately may affect the performance of the national economic (Government of
Malaysia, 2005).
In relation to the housing projection, the NPP study does not only project the total
housing number needed but also the land area required for future housing
development. The following assumptions were adopted in projecting future housing
requirement for the Peninsular Malaysia (JPBD Semenanjung Malaysia, 2003b):
(i) Every single household needs a housing unit;
(ii) Housing unit must be at the minimum standard that is on a par with the
accepted low-cost housing quality; and
(iii) 1 household constitutes 4.7 persons in 2000, 4.5 persons in 2005, 4.3
persons for 2010 and 2015 and 4.2 persons in 2020. These household
numbers represent the total housing supply needed or the total housing
needs.
Based on the above assumptions, the total housing projection for Peninsular
Malaysia was produced at a 5-year interval between 2000 and 2020. The way this
housing projection is conducted indicates that NPP only focuses on projecting the
future housing supply in the form of broad housing requirement without considering
the aspect of household housing demands. In relation to the projection of future
housing land requirement, it is stated in the NPP‟s technical report that the projection
for 2020 is only based on the broad estimation with a purpose to know the general
magnitude of land space required for the whole Peninsular Malaysia. It is also
mentioned that the projection is not intended to give an exact and accurate details,
neither on location and housing types nor the distribution by region and state.
The NPP study has considered the issue of oversupply which occurred throughout
Peninsular Malaysia as a threat to the development of housing sector. In the light of
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Federal Department of Town and Country Planning, Peninsular Malaysia
the issue, special recommendations to control and lessen the housing oversupply
were underlined in the NPP. The cautious and effective preparation of SSP and LP
as well as the tightening up of the approval of new housing applications by the
planning authorities are among the recommendations proposed in the NPP (JPBD
Semenanjung Malaysia, 2003b).
b. Formulation of Strategy and Policies on Housing Supply
The formulation of the strategy to optimise the use of land in urban area and for
housing development, that is the third strategy out of five NPP‟s strategies, has
implicitly touched the aspect of housing supply control. The strategy underlines that
to assess the land required for urban purposes, two factors should be considered.
Firstly, the demand for land generated by the increase in urban population and
secondly, an assessment of land that could be made available for urban uses without
jeopardizing the integrity of other land uses, particularly agricultural production area
and environmental sensitive areas (Government of Malaysia, 2005).
The strategy, after considering the 2000‟s housing supply assessment, housing
needs for 2000 and 2005 (Table 1) and projected housing needs up to 2020, also
outlines that the future housing requirement for Peninsular Malaysia can be
accommodated within the designated urban centres without the need for conversion
of forest lands to housing or use of the environmentally sensitive lands.
In addition, the strategy also addressed the present mind-set which perceives all
lands adjacent to urban areas are `ripe‟ for housing development need to be
changed. The NPP, through the strategy, has recognised that considerable waste of
resource can (and has) occurred when housing land has been prepared either
through conversion and layout plan approval without a thorough assessment of the
demand. In relation to the formulation of policy, only three policies, out of the 36
NPP policies (Government of Malaysia, 2005), are identified as applicable to plan
and control the housing development in Peninsular Malaysia.
(i) NPP Policy No. 1 – “The NPP shall serve as the framework to achieve
integrated and sustainable land use planning in the country”. This policy
provides a general direction of physical development for the nation and
becomes a basis for the preparation of the lower tier development plans. This
means that the process of housing planning at the state and local levels as
done through SP, LP and SAP also need to conform to the provisions of the
NPP.
(ii) NPP Policy No. 9 – “The concentration of urban growth in the conurbations
shall be anticipated and accommodated”. This policy, besides emphasizing
on the need for urban development to follow the stipulated conurbation
hierarchy, also addressed the management of change for urban human
settlement (urban housing). This policy encourages the use of vacant land
within the urban area for the development of housing. This policy suggests
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Federal Department of Town and Country Planning, Peninsular Malaysia
the property market operation and development approval process to consider
the realistic population and housing projections and ensure the approval of
housing land conversion is not at a rate faster than five years ahead of the
projected needs.
(iii) NPP Policy No. 17 – “A designated central authority shall be charged with
the responsibility to publish on regular basis information on land use
development”. This policy provides a measure which requires all
development plans to include a programme designating when land is `ripe‟ for
development and conversion to urban use. It is stated that the approval for
the conversion of land from agriculture to urban use shall adhere to such
programme and if the conversion is well ahead of development, there should
be a moratorium to the conversion.
The above discussion signifies that the aspect of housing supply, particularly relating
to the phenomenon of oversupply has become a concern of planning mechanism at
the federal level. This outcome has led the NPP to plan the country‟s housing supply
not only to meet the population housing needs but also to ensure the demands of
household and market are fulfilled. The formulation of the strategy and policies are
expected to guide the planning of housing supply at the state and local level.
However, as the NPP has only come into effect in 2005, whereas the SP and LP
were already prepared since the 1980s, its provisions could not be translated in the
lower tier plans, except for plans prepared after 2005.
5.1.2 Structure Plan: The Activities and Aspects Related to the Planning of
Housing Supply
Similar to the NPP, housing became the main sector in the preparation of SP either
in the old version SP or in the version of SSP. Both the SP manuals, Manual on
Function, Form and Content of Development Plans 1981 (DP Manual 1981) and
Manual of State Structure Plan 2001 (SSP Manual 2001) stipulated several activities,
scope and aspects that need to be considered in carrying out the housing study
(JPBD Semenanjung Malaysia, 1981; 2001). The main activities or stages of
housing study are as follows:
(i) Survey of existing housing situation;
(ii) Estimation of future housing requirement;
(iii) Preparation of general proposals to overcome and improve the process of
housing planning and development; and
(iv) Formulation of housing planning policies.
The written statement on housing planning policies together with the implementation
measures are documented in the SP final report, while the outcomes of the other
activities are documented in the housing technical report as well as in the report of
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Federal Department of Town and Country Planning, Peninsular Malaysia
survey. The main activities of housing study in the preparation of SP will each be
explained in the following sections.
a. The Survey of Existing Housing Condition
The survey of existing housing condition covers various aspects. The DP Manual
1981 and SSP Manual 2001 outline several aspects that need to be surveyed (JPBD
Semenanjung Malaysia, 1981):
(i) Existing stock of housing supply in terms of quantity, type, size, condition,
density and distribution;
(ii) Current housing needs and housing demand;
(iii) Recent trends for the building rates, private housing and public housing; and
(iv) Information about new housing approvals (committed housing) and lists of
housing redevelopment and improvement;
(v) Examination and analysis of the pattern, distribution, density and type of
existing housing stock by district and settlement area;
(vi) Examination of the provision and requirement for low-cost housing;
(vii) Analysis of the total housing supply and need for each district;
(viii) Analysis of the trend of housing market demand for each district; and
(ix) Collection of information on committed housing development by housing
category for the whole state and each district.
The above explanation indicates that there was already a guidance that required the
preparation of SP to assess the household housing demands as well as the trend of
housing market demand, other than the existing housing stocks and housing needs.
b. Forecasting of Future Housing Requirement
The forecasting of future housing requirement is one of the important activities in the
process of preparing development plans aimed to identify the total number of houses
needed by households in the future. It is also useful to know the types and
preferences of houses to be in demand to satisfy different types of households in
particular areas (Blake and Nicol, 2004).
In the context of the SP‟s housing forecast, both SP manuals only provide a simple
guidance to estimate the future housing requirement. The manuals stipulate that the
outcomes of future housing forecasts should be in two forms, which are in the form of
total housing quantity (housing needs) and in the form of housing demands. For the
forecast of future housing needs, both manuals have stipulated that it must be
produced in two time-frames, which is by the overall planning period as well as a
break-down by certain planning periods. Both manuals suggest that the estimation
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Federal Department of Town and Country Planning, Peninsular Malaysia
should be divided according to a 5-year interval. For future housing demand, both
manuals suggest forecasts according to housing category and type.
It should also be noted that both manuals did not specify clear guidance on the
forecasting techniques and aspects that need to be applied and considered in
conducting housing forecasts. The absence of the guidance has left the SPs applying
independently different housing forecasting techniques, from an integrated technique
to a common and simple one. The integrated version of forecasting technique, as
based on the view by Mark (1995), requires the housing forecasts to incorporate the
figures of expected future household income (effective demand) and housing choices
together with the figures of population growth, additional household, existing housing
stock and housing deficit or surplus.
The application of this technique could be considered as the most effective way to
forecast future housing requirement for the planned areas (Blake and Nicol, 2004).
Through this technique, the future housing forecast does not only produce a figure
on the total housing needs (total quantity of future housing supply) required but also
presents figures in the form of house categories, types and prices range preferred
and afforded by the future households. In the context of development plans in
Malaysia, only the first batch of SPs, namely Seremban SP, MBJB, Mukim Plentong
and Pasir Gudang SP and Kuala Lumpur SP are identified to have attempted to
apply the technique. Those SPs have considered the figures of expected future
household income in the forecasting of future housing requirement for the areas.
The common version of housing forecasting technique is found frequently applied in
the development plans in Malaysia, including in the preparation of SP. This version
only considers the figures of future population growth, housing aspects, such as
existing stock, backlog, vacancy and surplus, immediate and normal replacement
and additional new household for certain forecast periods. Considering the view by
Mark (1995) and Blake and Nicol (2004), the application of this technique can be
considered as less perfect compared to the previous technique. This is because it
only indicates future housing requirement in the form of total quantity (total housing
needs).
Further, it is also found that there are several SPs, particularly the old version SPs
which only used a simple technique to estimate future housing requirement. This
technique usually only considers the aspect of future household growth. Through this
technique, the total future housing requirement for certain areas is treated as equal to
the total future household numbers (existing plus additional new household). The
application of this technique could be considered weak and incomplete because it
disregards many important aspects and figures, such as housing backlog (current
shortage), vacancy and surplus of existing stock as well as the data on immediate
and normal housing replacement as outlined by Field and MacGregor (1987) and
Nooraini (1988).
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Federal Department of Town and Country Planning, Peninsular Malaysia
c. Preparation of the General Proposals to Improve the Process of
Housing Planning and Development
The written statement of the general proposals becomes one of the main contents of
the SP. The proposals are underlined in the report of survey as guidance to the
formulation of planning strategies and policies. For the housing study, both manuals
do not specify the aspects that need to be emphasized in outlining the general
proposals to overcome and streamline the process of housing development.
Nevertheless, it is understood that any general proposal that was or will be outlined is
based on the issues and problems identified during the analysis of existing housing
conditions. It means that each SP will outline different general proposals for housing
development.
Based on the examination of several SPs, namely Seremban SP, Melaka Bandaraya
Bersejarah SP, Majlis Daerah Muar Selatan SP, Negeri Sembilan SSP and Melaka
SSP, a number of common proposals on housing supply can be identified:
(i) An emphasis should be given to the development of low-cost houses to
ensure the supply fulfils the requirement for low income groups;
(ii) The supply of high and medium costs housing needs to be monitored and
controlled to avoid the occurrence of oversupply;
(iii) The process of housing approval by LPA should consider the amount of
vacant housing stocks before the releasing of new supply; and
(iv) The LPA should make an effort to ensure the house types planned and built
by developers are in line with the actual demand and income affordability of
the local population.
These statements indicate that there are efforts by these SPs to outline the proposals
for improving the process of planning of housing supply. The extent to which the
proposals can be implemented, however depends on how and to what extent they
are incorporated in the formulation of housing policies in those SPs.
d. Formulation of Housing Planning Policy
The definition of SP as written statements of policies in respect of the development
and use of land, has attracted both SP manuals to give an emphasis on the
formulation of housing planning and development policies. Detailed guidance in
terms of the aspects that need to be considered in formulating housing policies were
underlined in the DP Manual 1981 as follows:
(i) Requirement to formulate general policies to strengthen the role and the
activity of housing development in urban and rural areas;
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Federal Department of Town and Country Planning, Peninsular Malaysia
(ii) Requirement to distribute future housing stocks by certain periods, by
selected and potential settlement area (housing scheme and village
settlement) and by housing category (low, medium and high costs);
(iii) Requirement to consider the criteria for location suitability, accessibility and
distance from employment centres in planning housing development; and
(iv) Requirement to decide the priority areas and development phases for new
housing developments.
The SSP Manual 2001 proposes that the housing planning policy needs to be divided
into three categories, namely general policy, policy by subject and policy for specific
area. Guidance for the aspects that need to be incorporated in formulating housing
policies as in the DP Manual 1981, however are not mentioned in this manual. SSP
Manual 2001 only provides a simple statement which requires the SP‟s housing
study to formulate the spatial strategy and policies for housing development.
It is important to note that both manuals only provide a basic guidance to lead the
process of formulating housing policies in the SPs. Formulation of the actual housing
policy for each SP depends on the findings at the stage of survey of existing housing
conditions and at the stage of estimation of future housing requirement. It is also
guided by the general proposals related to the improvement of housing development
process as documented in the report of survey.
With regard to the policy on housing supply, it is normally formulated in two ways.
The first is concerned with a specific policy that explicitly outlines the aspects of
planning and controlling of housing supply. Secondly, the aspect of housing supply is
inserted or incorporated in other housing policies, such as the policy on affordable
and low-cost housing, encouragement of sustainability in housing development and
land use planning control for housing development.
The explanation above clarifies that the SP has a significant role to play in planning
housing supply. In the light of this, it is important for the preparation of SP to conduct
the activities of housing planning comprehensively and accurately to guide other
plans and facilitate the process of planning control. Thus, the objectives of housing
planning and development for the planned areas can be attained exhaustively.
5.1.3 Local Plan: The Activities and Aspects Related to the Planning of
Housing Supply
Similar to the NPP and SP, housing is one of the main sectors in the preparation of
LP either for the urban based LP or district LP. The scope and aspects that need to
be covered by the LP‟s housing study were guided by the DP Manual 1981 and
Manual of Local Plan Preparation 1993 (LP Manual 1993). The amended versions of
the LP Manual 1993 as formulated in 1999 (LP Manual 1999), 2001 (LP Manual
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Federal Department of Town and Country Planning, Peninsular Malaysia
2001) and 2002 (LP Manual 2002) also need to be referred in carrying out the LP‟s
housing study.
With regard to the activities or stages of housing study, the LP also has to carry out a
survey on existing housing conditions and calculate the future housing requirements
as done by the NPP and SP. Based on the figures on future housing requirement,
the LP has to determine the total land area and locate suitable locations for future
housing development for each LP area. The outcomes of these two activities must
conform to the provisions of housing planning policies as formulated in the SP (JPBD
Semenanjung Malaysia, 1981). Besides, it is also a duty of the LP to outline the
planning guidelines and standards to control the planning and development of
housing.
a. The Survey of Existing Housing Condition
The aspects of existing housing conditions that need to be surveyed during the
preparation of LP are outlined in detail in all LP manuals, except for the DP Manual
1981. The DP Manual 1981 only addressed a broad statement on the aspects,
problems and potentials that should be examined and analysed during the LP study
(JPBD Semenanjung Malaysia, 1981). The statement basically applies to all sectors
of the LP study, including the housing study. For the other LP manuals, the various
aspects to be surveyed were underlined comprehensively (Table 2).
The table indicates that there are seven main aspects, item (1) to item (7), that need
to be considered by the housing study in the preparation of LPs. Besides
emphasizing on the examination of the characteristic of existing housing stock and
collecting of data on committed development and proposed new housings, the LP‟s
housing study also need to identify the total supply of and demand for housing, carry
out analysis on demographic data relating to the identification of effective demand for
housing and analyse the trend and direction of housing development for each LP
area. Moreover, there are also additional aspects outlined in the LP Manual 2001
and LP Manual 2002 that require the LP‟s housing study (in particular for district LP)
to look in detail the trend and preferences in the current housing market and analyse
the figures on housing oversupply together with the factors that caused the
existence of the problems.
The above explanation indicates that there was already a comprehensive guidance
to carry out housing study in the preparation of the LP. It is shown that the LP‟s
housing study has to cover various aspects from the examination of existing housing
stocks, housing needs and committed housing up to the detailed assessment on
households effective demand and housing preferences in the current market.
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Federal Department of Town and Country Planning, Peninsular Malaysia
Table 2: The aspects of existing housing conditions that need to be surveyed during
the preparation of a local plan
The Aspects of Housing Study
LP
Man
ual 19
93
LP
Man
ual 19
99
LP
Man
ual 2
001
LP
Man
ual 20
02
1. Examination of the characteristics of existing housing stock such as total quantity, type, housing condition, density, physical distribution and existing supply by price category.
2. Analysis of supply and demand for current housing stock by category.
3. Collection of figures on new housing approvals (committed development) and applications under consideration by LPA and housing units under construction (covering the location, type, total unit, development size and density).
4. Analysis of the trend and direction of growth of housing development.
5. Identification of problems, limitations and potentials in housing development.
6. Analysis of current housing guidelines applied in the LP area. 7. Analysis of demographic figures, such as total population,
household size and income levels that relate to the need and demand of housing.
8. Examination of the provision and requirement for low-cost housing.
9. Analysis of the trend and preferences in the current housing market.
10. Analysis of housing oversupply consisting the total unit and causal factors.
11. Analysis of National and State housing policies.
12. Analysis of squatters, polluted housing schemes, traditional housing and houses with historical values.
Sources: Adapted from JPBD Semenanjung Malaysia (1993:21-22; 1999:17; 2001:
3-11; 2002: L3-4-13)
b. Forecasting of Future Housing Requirement
The process of forecasting of future housing requirement in the LP is basically similar
to the preparation of SP. All LP manuals have stipulated that the outcome of future
housing forecasts should be produced in two forms, that is in the form of broad
housing requirement (total housing needs) as well as in the form of housing
demands. The manuals also specify that the forecast of housing needs must be
produced in two time-frames, which is by the overall planning period and a break-
down by certain planning periods. The DP Manual 1981 suggested that the forecast
must be divided based on a 5-year interval. In relation to the forecast of future
housing demands, requirement for the forecasting in the form of category, type and
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Federal Department of Town and Country Planning, Peninsular Malaysia
prices of housing expected to be demanded by the future households in the planned
areas were suggested by the LP Manual 1993.
With regard to the application of forecasting techniques and aspects that need to be
considered in calculating the future housing requirement, similar to the DP Manual
1981 and SSP Manual 2001, the LP manuals have also not specified any guidance.
This has caused each LP to independently apply different housing forecasting
techniques. As in the SP, there are at least three techniques that could be applied by
the LP, ranging from an integrated technique to a common and a simple one.
The application of the common forecasting technique, which only considers the
figures of existing stock, backlog, vacancy and surplus, immediate and normal
replacement and additional new household, has caused the forecasting of future
housing requirement in those LPs to produce results only in the form of total housing
needs. This technique can be considered less effective compared to the integrated
forecasting technique which is capable of forecasting the future housing demands in
terms of house category, type and price ranges preferred and afforded by the future
households (Mark, 1995; Blake and Nicol, 2004).
c. Determination of Land Requirement For Future Housing Development
The determination of future housing land requirement is one of the important
activities in the preparation of LP. This activity enables sufficient land area to be
provided to accommodate the requirement of future housing developments in the
planned areas. According to Bramley et al. (1995), the accuracy of future housing
land area very much relies on the outcomes of the housing requirement forecast. As
such, if the housing requirement forecast is inaccurately conducted, it will implicitly
contribute to the inaccuracy of the figures for future housing land area.
The significance of the activity was addressed in the DP Manual 1981 as well as in
the LP manuals. Nevertheless, there is no specific guidance in terms of time-frame
and forms of outcome that should be produced by the activity outlined in those
manuals. It is found that all manuals only specify in general that the housing study
should identify the land requirements for future housing. The general guidance has
caused each LP to conduct the activity differently.
After the total land requirement for future housing is determined, the subsequent
process is to translate it properly and accurately into the LP‟s proposal map. This
process involves the identification and distribution of suitable areas for the
development of housing together with other land use sectors, such as commercial,
industry and public facilities.
d. Distribution of Suitable Locations For Future Housing Development
It is identified that all manuals do not provide in detail the aspects or factors that need
to be considered in distributing locations or zones for future housing development.
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Federal Department of Town and Country Planning, Peninsular Malaysia
DP Manual 1981 only highlights that the LP should determine and allocate precise
zones for all land use categories covering all land lots (lot-based). In addition, the LP
Manual 1993 and LP Manual 1999 specify that the distribution of housing location
should consider the trend and direction of existing and committed housing
development, development pressure and physical characteristics.
These aspects remain in both LP Manual 2001 and LP Manual 2002 to guide the
process of distribution of locations for housing development, especially for the
preparation of district LPs. In addition, these two manuals also suggest the
preparation of district LPs to apply the technique of multi-criteria evaluation (MCE) to
enhance the effectiveness of the distribution of various land use zones, including
housing land uses, in the LP areas.
Similar to the activity of determination of housing land requirement, as discussed
above, the absence of a clear guidance has resulted in each LP conducting the
activity differently. Nevertheless, it is identified that there are several common
aspects that are usually considered by the LPs in distributing suitable locations for
future housing development as follows:
(i) Availability of land adjacent to the existing housing development;
(ii) Good accessibility from main road;
(iii) Adherence to the alignment of current and new development corridor;
(iv) Avoiding from developing housing in restricted area, such as environmental
sensitive areas, highland areas and at the areas near to industrial zones; and
(v) Adherence to the determination of new areas for housing development as set
by the State Government and local authorities.
e. Outlining the Planning Guidelines and Standards to Control the Housing
Development
The role of LP as a main planning tool to the development control process (Asiah,
1999; Wan Muhammad Mukhtar, 2004), has led all LP manuals, including DP Manual
1981, to include the aspects of housing planning and development control in detail.
The DP Manual 1981 has outlined that the LP should set out a specific guidance to
control the capacity of total quantity and density of housing for the whole planned
area and formulate a detailed planning guideline and standards comprising building
set-back control, minimum land lot size and permissible floor space and height
control. This manual also requires the LP to demarcate the order and priority areas
for housing development by phasing it in every five years time-frame (5-year planning
phases).
The requirement to outline the various planning guidelines and standards for housing
development control in the preparation of LP is seen to have complemented the
overall process of planning of housing supply in Malaysia. The outcomes of this
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Federal Department of Town and Country Planning, Peninsular Malaysia
activity and other housing planning activities in the NPP, SP and LP, particularly
those related to housing development strategy and policies, determination of future
housing land requirement and distribution of locations or zones for future housing
development will become a vital guide to the LPAs in Malaysia to control, monitor
and approve the applications of housing development. The extent to which the
outcomes are considered and how the LPAs control the housing supply will be
clarified in the next section.
5.2 The Controlling of Housing Supply
Healey (1983) and Groves (2000) describe planning control as the executive arm and
becomes the heart of the land use planning system. It has also been referred to as
the `Cinderella‟ (Ratcliffe et al., 2004) and as `conveyor belt‟ (Hull, 1997) of the
system that deals with the day-to-day administration of controlling, monitoring and
making decision on planning applications. In relation to the housing land use,
Farthing (1996) perceives that there are three distinct roles played by the planning
control mechanism, namely to regulate the amount and location of land to be
developed for housing, to regulate the layout, density and form of housing and to
regulate the price at which land has been made available for housing. These
aspects will be examined in this section by exploring the process and the aspects
that are considered in controlling and approving the housing supply in Malaysia.
5.2.1 The Process and Procedure of Controlling Housing Supply
The process of controlling housing supply in Malaysia is bound by the provisions of
planning control as enacted by Act 172. The preceding discussion indicates that in
principle the specific procedure to control and approve housing supply does not exist.
The control process is included in the general procedure of planning permission for
housing applications which also applies to other development applications . Based
on the procedure, the aspect of housing supply is controlled by the LPA together with
other housing planning aspects, such as preservation of topography, coordination of
layout plan and control of the provision of public facilities, in the approval process of
housing developments.
The planning permission procedure requires LPAs not to grant the housing planning
approval otherwise than in conformity with the proposals in the LP (S. 18(1), Act
172). The LPAs also have to take into consideration other matters, such as the
provisions of the gazetted SP, direction given by the SPC and provisions that the
LPA thinks are likely to be made in development plans under preparation (S. 22(2),
Act 172) when dealing with housing development applications.
In addition, if the proposed new housing developments involve a population
exceeding ten thousand or cover an area of more than one hundred hectares, the
LPA (through the SPC) shall request an advice from the NPPC on the submitted
application (S. 22A, Act 172). The rationale of this provision, according to the NEAC
(Kerajaan Malaysia, 1999a; 1999b) and Ismail (2002) is to allow Federal Government
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Federal Department of Town and Country Planning, Peninsular Malaysia
to take part in the approval process of mega-scaled housing projects throughout the
country aimed to avoid oversupply and overhang of housing property.
Similar to the preparation of development plans, there are various manuals on
planning permission prepared by the Federal TCPD and every State TCPD aimed to
lead LPAs to enforce the procedure accordingly. The manuals, other than detailing
the process and procedure of submission and approval, also include the factors that
need to be considered by LPA in controlling and approving development proposals,
including housing applications.
5.2.2 Factors to be Considered in Controlling Housing Supply
There are many factors and aspects that need to be considered in controlling
housing supply. The compliance to the SP and LP proposals, particularly land use
zoning, stipulation of housing development priority areas, density control and
planning guidelines become the basis or guidance to the LPA in considering the
housing development applications (Asiah, 1999).
With regard to the compliance of land use zone, legally the LPA may only grant an
approval if the housing application is situated in the housing zone. Nevertheless, in
practice there are many cases where approvals were still given although the sites are
planned for other land use activities or located outside the permitted development
area. The practice of non-compliance to the LP‟s land use zoning occurred
extensively in mid 1990s. This practice was argued to have contributed to the
existence of housing oversupply and property overhang in Peninsular Malaysia
(Kerajaan Malaysia, 1999a; 1999b; Mohamad Fadzil, 2005).
In relation to the requirement to comply with the stipulation of priority areas for
housing development, less attention is given regarding the matter in the process of
controlling and approving of housing supply. The failure of most LPs to mark clearly
the boundary of housing development priority areas (housing development phases)
has discouraged the LPAs to consider this factor. With regard to density control,
housing development applications will need to follow the permitted maximum density
as outlined in the LP. Basically, there are two methods of housing density control
enforced by LPAs, namely a control by area and control by housing category
particularly for flatted housing. The examples of the methods are as follows (JPBD
Johor, 2002; Alias, 2006):
(i) Housing density control by area : 6-8 units per acre for village settlement area
and 10-15 units per acre for urban area; and
(ii) Housing density control by flatted housing categories : 20 units per acre for
condominium, 40 units per acre for apartment and 60 units per acre for low-
cost housing.
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Federal Department of Town and Country Planning, Peninsular Malaysia
The planning guidelines related to the ratio of housing category and types of housing
development have also become a significant factor in controlling housing supply.
Most of the LPAs particularly in the Johor State stipulate a ratio of 40:40:20 (that is
40.0% for low-cost, 40.0% for medium-cost and 20.0% for high-cost) as a condition
that need to be followed by housing developers (Alias, 2006). In relation to the type
of housing development, there are LPAs that set the condition where only landed
housing is permitted to be developed in certain areas.
Besides having to be in conformity with the LP, the housing development applications
also have to fulfil the current housing policies formulated by each State. The policy
on low-cost housing allocation is one of the eminent policies that are directly related
to the control of housing supply. This policy requires housing developers to construct
at least 30 percent (40 percent for the Johor State) of the total housing units as low-
cost housing (Chan, 1997; Ghani and Choong, 1997; Nor‟Aini, 2001; KPKT, 2005;
Alias, 2006).
Both sections signify that many activities, factors and aspects need to be considered
in the planning and controlling of housing supply. The implementation of the
activities effectively are important to ensure the objectives of housing planning as
discussed in the next section, can be achieved exhaustively.
6.0 THE OBJECTIVES OF PLANNING AND CONTROLLING OF HOUSING
SUPPLY
There are various objectives that need to be achieved by the process of planning and
development of housing in Malaysia. In relation to the aspect and the process of
planning and controlling of housing supply, it is found that the objective related to the
process was not specifically or clearly underlined either in the development plan
manuals or housing planning control guidelines. Nevertheless, based on the
examination of the general objectives of housing study and outcomes related to
housing supply in some SPs and LPs, the objectives were successfully elicited. It
basically covers the objectives to provide adequate housing to the current and future
population; ensure housing provisions are within the affordability of various income
groups; coordinate and balance the supply and demand of housing; ensure new
housing is developed in the areas planned for housing use; and ensure the activities
of housing planning and control consider the market demand.
The requirement to achieve the above objectives along with the process of planning
and controlling of housing supply is also mentioned by Ho (1994) and Asiah (1999).
According to them, the process of housing planning and control should fulfil at least
four objectives, namely to meet the population housing needs, fulfil household
housing demands, consider current and future market demand and matching the
number of housing supply with the number of housing demand.
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The objective to meet the population housing needs becomes the main basis for the
process of housing planning. Ratcliffe (1981) and Golland and Gillen (2004) perceive
the objective as a fundamental nature of housing planning and development. In
Malaysian context, the achievement of the objectives is important to ensure the aim
of the national housing development policy to provide adequate housing for all
Malaysians, as outlined by the five-year Malaysia plans since the Third Malaysia Plan
(1976-1980) and up to the Ninth Malaysia Plan (2006-2010), is achievable (Mohd.
Razali, 1997; Goh, 1997; Asiah, 1999). The significance of the objective was
translated at all levels of development plan from the NPP, to SSP as well as LPs.
Most of the housing policies and proposals formulated in the plans are found to have
stressed the requirement to meet the population housing needs for the planned
areas.
Achieving the objective to meet the population housing needs alone, however, was
insufficient in order to achieve a more integrated and responsive housing planning.
Hull (1997), Healey (1999), Nicol (2002), Golland and Gillen (2004) perceive that the
process of housing planning also needs to fulfil and consider the aspects related to
housing demand, particularly household effective demands (household affordability)
and current and future market demands. In relation to the objective to balance the
housing supply with housing demand, Ho (1994) generally perceives that the process
of planning and controlling of housing supply has to achieve the objective to avoid
mismatch between the housing supply and demand that may cause shortage or
surplus to the housing supply.
7.0 THE FRAMEWORK OF THE PLANNING AND CONTROLLING OF
HOUSING SUPPLY
The exploration of the activities and objectives of planning and controlling of housing
supply in Malaysia, as discussed in section 4.0 through section 6.0, has led this
paper to develop the framework for its overall process. The framework as
conceptualised in Figure 7 shows that the planning for housing supply is given an
emphasis in all development plans. The NPP which is prepared at the federal level
has examined the status of current housing supply and housing needs and forecasts
the future housing needs and housing land requirement for Peninsular Malaysia. The
NPP has also formulated the land use planning strategy and policies to be
considered and implemented in the planning of housing supply at the state and local
levels.
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Figure 7: The framework of the process of planning and controlling of housing supply
Meeting housing Needs.
Fulfilling housing demands.
Considering market demand criteria.
Ensuring housing is developed in the areas planned for housing.
Balancing supply and demand of housing
OBJECTIVES TO BE ACHIEVED
Forecasting future housing requirement for the LP’s area (total housing needs, housing demands and land
requirement in two time-frames, use certain techniques)
Controlling and approving new housing supply (apply the planning permission procedure, compliance to land use zone, priority areas, density control, planning guideline, ratio and types of development, low-cost policy)
ACTIVITIES OF PLANNING AND CONTROLLING OF HOUSING SUPPLY
PLANNING MECHANISM
Forecasting future housing requirement for the SP’s area (total housing needs, housing demands and land
requirement in two time-frames, use certain techniques)
Outline the general proposals (to overcome the
issues and to improve the process of housing development)
Locating locations for future housing development (in the form of land use zone, consider
physical potentials, trend and direction of current growth and future market demand, use the technique of multi-criteria evaluation)
Determining future housing land requirement (total
land area to accommodate future needs in two time-frames)
NATIONAL PHYSICAL PLAN
(National Level)
Forecasting future housing requirement
(total housing needs and total land requirement)
Formulating development planning strategies and policies (1 strategy and 3 policies touched on the
housing planning and development)
STRUCTURE PLAN
(State Level)
LOCAL PLAN (District or LPA
Level)
PLANNING CONTROL (By LPA)
Formulating housing planning and development policies (specific and general policies on housing supply
planning)
Examining current housing conditions
(total supply, total needs, surplus/shortage, household
demand, market demand and preference, direction of current growth, problems, limitation and potentials)
Preparing housing planning guidelines and standards (maximum capacity of total quantity,
permissible density, suitable category in certain areas)
Examining current housing conditions
(total supply, total needs and surplus/shortage)
Examining current housing conditions
(total supply, total needs, surplus/shortage, household demand, market demand and issues)
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The preparation of SP, which currently is prepared for the whole state, also requires
the examination of the current housing conditions covering the data on housing
supply, housing needs, household demands and market demands and forecast the
future housing requirement for the whole state. In this plan, the future housing needs,
housing demand and land requirement are required to be forecasted in two planning
time-frames, namely for the whole planning period as well as a breakdown by certain
planning periods. It is a duty of SP to formulate the planning policies related to the
aspect of housing supply to be enforced throughout the state.
The preparation of LP, which covers the whole district or certain LPA areas, is seen
to have a greater responsibility in the planning of housing supply in Malaysia. This
plan has to examine the current housing market preferences, the trend and direction
of housing growth as well as the problems, limitations and potentials of housing
development for the planned areas. This plan also has to forecast the future housing
needs, housing demand and land requirement in two planning time-frames, similar to
the SP‟s housing forecast. The main duty of the LP is to decide on the total housing
land area required for certain planning periods and locate the suitable locations for
future housing development in the form of housing land use zones. It is also a duty of
the LP to prepare the planning guidelines and standards to guide the development of
housing in the planned areas.
The outcomes in the form of strategies, policies, determination of future housing land
requirement, proposed future housing locations (housing land use zones) and
guideline and standards produced by the above plans will be used as basis or
guidance for the LPAs to control and approve housing supply. The new housing
development applications will be assessed and controlled through the procedure of
planning permission before an approval is granted. In exercising this procedure,
there are many factors and aspects that will be considered by LPA, such as land use
zoning, stipulation of housing development priority areas (housing development
phases), density control and current housing policies.
In addition, the framework also clarifies that the implementation of planning and
controlling of housing supply in Malaysia need to achieve the objectives of housing
planning, namely to meet the population housing needs, to fulfil the household
housing demands, to consider the criteria of housing market demand, to ensure the
housing is developed in the areas planned for housing and to balance the number of
supply and demand of housing.
The process of housing planning in Malaysia is basically quite similar to the process
and practice adopted in the UK. The UK, before introducing the Local Development
Framework provided by the Planning and Compulsory Act 2004, applies the county
level SPs and district level LPs (including Unitary Development Plans for Unitary
authorities) to plan the development of housing (including the planning for housing
supply). The activities of examination of housing conditions, forecasting of housing
requirement, formulation of housing policies and allocation of future housing land
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requirement and locations are exercised at various levels of the development plans
(Golland, 1996; Greed, 1996; Ratcliffe et al., 2004).
The UK, since the implementation of the 1947 Town and Country Planning Act until
the 2004 Planning and Compulsory Act, also applies the system of development
control through the procedure of planning permission to assess, control, monitor and
approve the housing development applications (Mohd Anuar, 1991; Ratcliffe et al.,
2004). Similar to the practice in Malaysia, provisions and proposals of the
development plans are regarded as the basis in making a decision for housing
planning applications.
Several advantages are found in the UK housing planning process. The provision of
future targets for the allocation of housing needs and housing land in the UK‟s
development plans, particularly the district levels LP, is based on medium-term
projections of housing needs and housing demands and latest housing market
demands (Cooper and Lybrand, 1985; Bramley et al., 1995). The calculations are
revised regularly to enable the allocation of housing needs and housing land to
respond quickly to the changes in household effective demand and market conditions
(Monk, 1996). This is different from the practice in Malaysia where future housing
needs and land requirement for the planned areas are only determined based on the
data (population, household and housing data) of the base year of preparing
development plans.
Another advantage about the UK‟s housing planning process is the requirement for
the LPAs to have a close working relationship with the housing associations (housing
developers), through joint housing studies, in formulating LP housing policies and
proposals. This enables the LPAs to make available a five year supply of housing
lands to meet forecast needs and to take into account the housing developers‟
assessment of the availability and the marketability of sites (locations) for immediate
and future housing development (Bramley et al., 1995; Lambert, 1996; Hull, 1997;
Ratcliffe et al.; 2004). This practice does not officially exist in the process of housing
planning in Malaysia. The LP‟s housing proposals as well as the SP‟s housing
policies are solely based on the outcomes of the housing study in the plans‟
preparation conducted by planning authorities.
The adoption of the system of „plan, monitor and manage‟ in the UK, as discussed in
section 3.2, has also differentiate its housing planning practice from the practice in
Malaysia. The system enables housing supplies to be planned and produced in the
right type and quantity and at the right locations, aimed to meet the best housing
requirement for local population in the particular periods (Adams and Watkins, 2002;
Carmona et al., 2003). Housing planning in Malaysia is seen still emphasising on the
system of „predict and provide‟ which aimed to meet sufficient housing needs for the
population. This system has not only caused the LPAs to deliver the allocation of
housing supply in advance of demand, but may also cause the provision of the
wrong type, quantity and location of housing.
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8.0 CONCLUSION
The above discussion clarifies that the land use planning system, which acted as a
government intervention instrument in the process of urban development, plays an
important role to plan and control housing development, especially in relation to the
aspect of housing supply. The role of land use planning in this aspect is not limited
to achieve the objective of meeting housing needs, but also to fulfil the household
housing demands. With regard to this, it is important for the land use planning to
understand and distinguish the concepts of housing needs and housing demand in
planning housing supply. The need to differentiate between housing needs and
demand is not only significant at the stage of formulation of housing policies but also
important at the stage of determination of the volume of housing to be produced, the
tenure of new housing development, locations and the types of housing to be built.
The market demand criteria, in addition to the aspects of housing demand are also
important to be considered and incorporated in the planning of housing supply. The
local housing market conditions and the expected house buyer preferences in terms
of price, location and type of housing are among the criteria that influence the
effectiveness of land use planning system in managing housing supply. In other
words, to achieve an effective planning for housing supply, it is vital for the land use
planning system to understand, be sensitive and responsive to the need of housing
market.
Another important issue relates to the system of „plan, monitor and manage‟. This
new system applied in the UK has led the LPAs to endeavour to meet the best
housing requirement for local population. The introduction of the system was
perceived as responsive approach to plan and control housing in the right type and
quantity and in the right locations.
It can also been seen that the development plan and planning control as legislative
mechanisms in the land use planning system have a specific role in the process of
housing supply. The development plans play a role in formulating housing policies
and determine future housing requirements, followed by the process of planning
control to monitor and control the applications of new housing development before it
is approved to be developed. In carrying out the activities, both mechanisms should
recognised that the future housing requirement is not only driven by the population
trend but also influenced by other factors, such as effective demand (household
affordability and their willingness to pay for housing), household choices (in terms of
tenure, dwelling type, form and method of new homes to be developed) and market
demand criteria (conditions of local housing market and buyer preferences in terms
of price, location and type of housing).
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The above discussion also explains the complexity of the process of housing
development in Malaysia. The process is very highly regulated, and involves many
stages of approval from various authorities before the housing project is permitted to
be implemented. The process of planning and controlling of housing supply which
adheres in the whole process of housing development is also very complex and go
through a tight process. The activity of planning for housing supply was given a
special attention in all hierarchies of development plan. The NPP has formulated a
general strategy and policies to guide the planning and controlling of housing supply
in Peninsular Malaysia. In the preparation of SSP, the activity continues through the
examination of the existing housing conditions, forecasting of future housing
requirement and formulation of specific policies to be enforced throughout the state.
The preparation of LPs plays a greater role in planning housing supply. These plans
have to examine in detail the existing housing conditions, forecast the future housing
requirements accurately, determine the total housing land area required for certain
periods and distribute the most suitable locations for future housing development.
The activity of controlling of housing supply is exercised through the procedure of
planning permission. This procedure requires LPAs to consider the outcomes of
development plans before making a decision to approve a new housing supply.
Theoretically, by following the existing processes, from the stage of preparation of
NPP to the planning control process, housing supply should be planned and
controlled effectively and fulfil the objectives of housing planning.
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